A Bridging Loan is a short-term financing solution used to cover immediate funding needs, often for property purchases, development projects, or urgent cash flow. These loans are secured against an asset and typically offer interest "roll-up" options, allowing repayment of interest at the end of the term, or fixed interest-only monthly payments. Bridging loans, development finance, and auction finance are flexible, short-term property funding options. Development finance is ideal for property projects, and auction finance helps buyers secure properties quickly. Bridging loans may be open (no set repayment date) or closed (with a clear repayment plan). While they offer fast access to capital, they usually come with higher interest rates, as well as arrangement, valuation, and possible exit fees.
Bridging loans are typically available to businesses or individuals who need short-term financing, often secured against property or assets. Lenders assess your property’s value, your ability to repay, and your creditworthiness. You’ll need to provide details about the property being used as collateral and the purpose of the loan.
Bridging loans can range from as little as £25,000 to several million pounds, depending on the value of the property or asset used as security. The amount available is typically based on a percentage of the property’s market value, often around 60-75%.
Once your application is approved, bridging loans can often be arranged within 1–2 weeks. The process can be quicker if you have all required documents ready, especially for repeat or trusted clients, making it a great option for time-sensitive opportunities.
Bridging loans are commonly used for property purchases, refurbishments, or other urgent needs where longer-term financing is not available or suitable. They can also be used for business expansion, managing cash flow gaps, or bridging the gap between the sale of one property and the purchase of another.
The costs for bridging loans generally include a higher interest rate (typically 0.5% to 1.5% per month) compared to traditional loans. Additional fees may include arrangement fees, exit fees, and administration costs. Loan terms are short, typically ranging from 1 to 12 months, and repayment is usually made in a lump sum at the end of the loan term.
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Loan terms typically range from a few weeks to 24 months, depending on your needs and repayment strategy.
Yes, it’s a popular option for financing renovations or developments until long-term funding is secured.
Yes, these loans are secured against assets, usually property.
Funds can often be arranged within days, making it ideal for time-sensitive situations, which can be used as a tool to release funds whilst securing a longer term solution that could take longer to get to the approval stage.
An exit strategy is your plan for repaying the loan, such as selling a property or securing long-term finance. Lenders require this to ensure repayment.
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"Bridging loans offer short-term funding solutions for businesses facing time-sensitive opportunities or challenges. Ideal for covering gaps in cash flow, property purchases, or urgent investments, these loans are designed to keep businesses moving forward when timing is critical."
