What Is a Bridging Loan? A Clear UK Guide for Property Buyers and Investors

A bridging loan is a short-term, fast-access form of finance designed to “bridge” a gap between buying a property and securing longer-term funding or selling an existing one. In the UK, bridging loans are commonly used when timing is critical and traditional mortgages are too slow.

For example, a homeowner in Leeds might find their dream home before their current property has sold, or a property investor in London could need rapid funding to purchase a run-down house at auction. In both cases, a bridging loan can release funds in weeks or even days, allowing the purchase to go ahead while a longer-term solution is arranged.

The different types of bridging loans

Some bridging loans are classed as closed bridge loans, where there is a clearly defined exit strategy, such as a confirmed property sale or an agreed remortgage date. These are often seen as lower risk by lenders and can attract better rates. Open bridging loans don’t have a fixed repayment date and are used when the exit is planned but not guaranteed, such as selling a property that hasn’t yet gone under offer.

Bridging loans can also be regulated or unregulated. Regulated bridging loans are used when the property involved is, or will be, the borrower’s main residence, while unregulated bridging loans are more common for buy-to-let properties, commercial buildings or development projects.

When bridging loans are typically used

Bridging finance is most often used in time-sensitive situations. Auction purchases are a classic example, as buyers usually need to complete within 28 days. They’re also popular for chain breaks, where delays elsewhere threaten to collapse a property transaction.

Developers frequently use bridging loans to buy properties that are not yet mortgageable, such as homes without kitchens or bathrooms. Once renovations are complete, the loan is repaid through a standard mortgage or sale at a higher value.

Typical bridging loan criteria and terms

UK bridging loans are usually short term, ranging from a few months up to 12 or occasionally 24 months. Interest rates are higher than standard mortgages and are often charged monthly rather than annually. Many lenders allow interest to be “rolled up”, meaning it’s added to the loan and paid at the end, which helps keep monthly outgoings low during the term.

Lenders focus heavily on the value of the property and the strength of the exit strategy. Loan-to-value ratios typically sit between 60% and 75%, depending on the property type and borrower profile. Fees such as arrangement costs, valuation fees and legal expenses should also be factored into the overall cost.

What Types of Properties Can Bridging Loans Be Borrowed Against?

Bridging loans are flexible and can be secured against a wide range of UK property types. These include standard residential houses and flats, buy-to-let properties, HMOs, mixed-use buildings, land with planning permission and commercial units such as offices or shops. Some lenders are also comfortable with non-standard construction or properties in poor condition, which would usually be declined by mainstream mortgage lenders.

How to keep bridging loan costs as low as possible

Keeping borrowing within a lower loan-to-value can unlock better interest rates and reduce overall costs. Having a clear, credible exit strategy — such as a mortgage offer in principle or strong evidence of an imminent sale — reassures lenders and can lead to more competitive terms.

Choosing rolled-up interest rather than monthly payments can help with short-term cash flow, while repaying the loan as early as possible reduces the total interest charged. Using experienced solicitors and valuers can also prevent costly delays.

How to improve your chances of being approved for a bridging loan

Bridging loan applications are most often declined due to weak or unrealistic exit strategies, overvalued properties or affordability concerns. Clearly demonstrating how and when the loan will be repaid is crucial. This might include proof of income for a remortgage, details of a property sale, or evidence of refurbishment plans and resale values.

Being transparent about your financial position, credit history and property condition helps avoid last-minute issues. Working with a specialist bridging broker can also dramatically improve approval chances, as they understand lender criteria and can match you with providers suited to your circumstances.

Choosing the right bridging loan for your needs

A bridging loan can be a powerful short-term funding solution for UK buyers, investors and developers who need speed and flexibility. While costs are higher than traditional mortgages, careful planning, a strong exit strategy and sensible borrowing can keep expenses under control.

Used correctly, bridging finance can unlock opportunities that might otherwise be missed — helping you move quickly in a competitive property market while setting up a smooth transition to longer-term funding.