Bridging Finance
Bridging Finance
Written by Chris Canham, commercial finance broker with nearly 30 years in financial services. Last reviewed .
Short-term funding, arranged fast, when the timing of a deal matters more than the rate.
What it is
What is a bridging loan?
A bridging loan is short-term finance secured against property, usually repaid within months rather than years. It solves a timing problem a term mortgage cannot, such as completing a purchase before a sale, a refinance or planning is in place. You pay more than for a term loan in return for speed and flexibility.
A bridging loan is short-term finance secured against a property. It is designed to move quickly and repay quickly — typically between one and twenty-four months. It exists to solve a timing problem that a term mortgage cannot.
The rate is higher than a term loan because the lender is pricing two things a term lender does not: speed of delivery and the risk of a defined exit. Underwriting is compressed into weeks rather than months, and the lender's return is capped by a short horizon.
What you are buying is not cheap money. You are buying the ability to complete on a deal that would otherwise fall away. Priced against the value of the transaction, the finance is usually the smallest number on the page.
Regulation
Is a bridging loan regulated by the FCA?
It depends on the property. A bridge secured on a home that you or an immediate family member live in, or plan to live in, is regulated by the FCA. Bridges on investment, commercial or development property are generally unregulated. Edge Commercial Finance arranges unregulated bridging only and refers regulated cases elsewhere.
Bridging splits into two markets. A bridge secured against a property that you or an immediate family member occupy, or intend to occupy, is a regulated mortgage contract and sits under FCA regulation. A bridge on an investment property, a development site or a commercial asset held through a company is generally unregulated.
The distinction is not academic. It changes the lender panel, the documentation required, the timescales you can realistically expect, and the protections available to you. Regulated bridges carry affordability testing, prescribed disclosure and access to the Financial Ombudsman Service. Unregulated bridges move faster and flex further, but the consumer protections do not apply in the same way.
Edge Commercial Finance advises on unregulated bridging — investment, commercial and development security held personally or through a company. We do not advise on regulated bridging secured against your own or a family member's home. Where an enquiry falls into regulated territory, we will say so at the first conversation and refer you to a firm with the appropriate permissions rather than take it forward.
Typical use cases
When should I use a bridging loan?
Use a bridging loan when timing matters more than the rate: buying at auction, breaking a chain, buying a property a mainstream lender will not accept in its current condition, refurbishing before refinance or sale, or raising capital quickly against property you already own. In every case, you need a clear way to repay.
Auction purchases against a 28-day deadline
Breaking a chain on a residential purchase
Buying a property no lender will take in its current condition
Refurbishment before refinance or sale
Raising capital against an existing asset
Bridging a gap while planning permission is secured
Developer exit — replacing a development facility on a completed but unsold scheme, usually at a materially lower rate
Second charge bridging — raising capital behind an existing mortgage without disturbing a favourable rate
Light versus heavy refurbishment — where a bridge becomes a refurbishment facility with staged drawdowns
Indicative terms
What does a bridging loan cost?
Bridging costs more than a term mortgage because you pay for speed and a short horizon. The total cost combines the monthly interest rate, an arrangement fee, valuation and legal costs, and sometimes an exit fee. Your pricing depends on the property, the strength of the exit and your experience as a borrower.
| Measure | Typical range |
|---|---|
| Monthly interest rate | 0.55% – 1.25% |
| Maximum LTV | Up to 75% |
| Term length | 1 – 24 months |
| Arrangement fee | 1.5% – 2% of loan |
| Exit fee | 0% – 1% (deal-dependent) |
| Minimum loan size | £150,000 |
| Maximum loan size | £25m+ |
| Typical time to completion | 2 – 4 weeksOften within 5–10 working days where title and valuation are straightforward and dual representation is available. Most cases run to two to four weeks once valuation and legals are factored in. |
Market ranges shown for guidance only. Your terms will depend on the asset, the exit and your experience.
Ranges reviewed February 2026. Market conditions change — confirm current terms before relying on these figures.
Exit strategy
What exit strategies do bridging lenders accept?
Bridging lenders accept three main exits: selling the property, refinancing onto a longer-term mortgage once it is lettable or trading, or repaying from the sale of another asset. Whichever you choose, the lender will test whether it is realistic and fits within the loan term. If the exit is not credible, the bridge will not be approved.
A bridge is underwritten on how it will be repaid, not just on the asset it is secured against. Get the exit right and everything else follows.
Sale of the asset
Buy, refurbish, sell. The lender will want to see a realistic sale price, a marketing plan and a timeline that fits inside the term with room to spare.
Refinance to term
Bridge now, refinance onto a commercial mortgage or buy-to-let once the property is lettable or trading. The lender will want comfort that the term product is achievable on the numbers.
Sale of another asset
Repay from the proceeds of a separate property already on the market or under offer. Expect the lender to look at the sale in detail — price, buyer, chain and timing.
If the exit is not credible, the bridge is not either. This is the first thing any lender will test.
Overruns
What happens if my bridging loan exit is delayed?
If your exit slips, most lenders will consider extending the term, usually for a fee and at a higher rate. If the term expires without an agreed extension, the loan can move onto a default rate, which is far more expensive. Agree extension terms before you sign and tell the lender early if delays appear.
Every bridge is written to a date, and a meaningful number of them do not hit it. What matters is what happens next — and borrowers almost never ask before they sign.
Extensions
Usually available, usually at a higher rate, usually with a fee. Negotiate the extension terms at the outset, not at month eleven.
Default rates
What the rate becomes if the term expires without redemption — typically 2% to 3% per month. Read this clause before anything else in the offer.
Refinancing out
A development exit bridge or a term product can rescue an overrun, but only if the asset and the borrower still qualify. Start that conversation at month eight, not month twelve.
Ask for the default rate and the extension terms before you accept. They are the two numbers that decide what a bad month costs you.
Auction
Can I use a bridging loan to buy at auction?
Yes. Bridging is a common way to fund an auction purchase, because completion is usually due within 28 days of the hammer falling and a mortgage rarely moves that fast. Arrange the finance before you bid, with a lender who has reviewed the legal pack, so you do not risk losing your deposit.
At auction the contract is exchanged on the fall of the hammer. The deposit is paid immediately and is non-refundable, and completion is typically twenty-eight days — occasionally fourteen. Miss it and you lose the deposit and remain liable under the contract.
The practical implication is simple: finance is arranged before bidding, not after. That means a lender who has seen the legal pack, an indication written against the specific lot, a view on value that survives the hammer price, and a clear exit already articulated. A generic agreement in principle is not the same thing.
Where the timetable is tight, title insurance can remove the need to resolve minor title defects before completion, and dual representation — one firm acting for both borrower and lender — compresses the legal process considerably. Both need to be agreed at the outset, not discovered in week three.
Cost calculator
How do I work out the cost of a bridging loan?
Add together the interest for the full term, the arrangement fee and the other costs such as valuation and legal fees. How the interest is handled matters: retained, rolled up or serviced monthly. The calculator below models each option on your numbers so you can see the total cost before speaking to a lender.
Change the inputs to see how rate, term and interest treatment move the total cost of finance.
Your deal
Payable on completion.
Valuation, lender legal, borrower legal.
Interest is deducted from the gross loan up front, reducing the net advance.
Your figures
- Gross loan
- £325,000
- Net advance released to you
- £285,350
- Total interest over term
- £33,150
- Arrangement fee
- £6,500
- Exit fee
- £0
- Broker fee
- £3,250
- Other costs
- £3,500
- Total cost of finance
- £46,400 · 14.28% of loan
- Day one funds required from you
- £181,750
- Redemption figure at exit
- £325,000
AssumptionsShowHide
Included
- Lender interest across the full term, based on the treatment selected.
- Lender arrangement fee, calculated on the gross loan.
- Lender exit fee, calculated on the gross loan where entered.
- Broker fee, payable on completion.
- An estimate for valuation, lender legal and borrower legal costs.
Not included
- Stamp Duty Land Tax and any other purchase taxes.
- Insurance, ground rent, service charges and holding costs.
- Refurbishment or works costs, and any drawdowns beyond day one.
- Early redemption charges or extension fees.
- VAT on professional fees where applicable.
Illustration only. Not a quote, offer, or decision in principle. Confirm all figures with the lender before you rely on them.
Market snapshot
- Typical maximum LTV in the market
- [PLACEHOLDER]
- Source: [PLACEHOLDER] [PLACEHOLDER], as at [PLACEHOLDER]
- Typical monthly rate range
- [PLACEHOLDER]
- Source: [PLACEHOLDER] [PLACEHOLDER], as at [PLACEHOLDER]
- Typical time to complete
- [PLACEHOLDER]
- Source: [PLACEHOLDER] [PLACEHOLDER], as at [PLACEHOLDER]
- Typical arrangement fee
- [PLACEHOLDER]
- Source: [PLACEHOLDER] [PLACEHOLDER], as at [PLACEHOLDER]
Industry figures for guidance only. Your terms depend on the deal and lender.
Free download
Take the list with you.
A one-page bridging deal checklist — everything a bridging lender needs to price and complete inside four weeks. Free, no follow-up unless you want one.
FAQ
Questions we hear most often.
Related case studies
All case studies
BridgingThree facilities arranged in parallel
Three facilities, one client — two bridges plus development finance
A South London portfolio landlord running two purchases and a ground-up development at the same time. Three funding lines arranged and managed in parallel, with no deal allowed to slow another down.
BridgingValuation corrected, offer secured on proper terms
The valuation error — challenging the numbers on a high-value bridge
A material error in a valuation on a high-value Surrey residential property — the kind of mistake that, unchallenged, kills a deal or costs the borrower tens of thousands in reduced lending.
Have a deal in front of you?
Send us the outline. You will get a straight answer on deliverability and indicative terms — not a form response.
We aim to respond the same working day.
Or book a 30-minute call at a time that suits you.