Bridging finance has become one of the most widely used tools in the UK property market. With delays in mortgage underwriting, rising auction activity, and increasing demand for fast completions, more buyers and developers are turning to bridging loans as a flexible, short-term solution.
This guide explains how bridging loans work, when they make sense, the costs involved, and how to avoid the common mistakes we see in 2025.
What Is a Bridging Loan?
A bridging loan is a short-term secured loan lasting between 3–24 months. It is designed to “bridge” the gap between buying a property and arranging long-term finance or selling another asset.
Traditional mortgages can take 6–10+ weeks. Bridging can complete within 5–12 working days, depending on valuation and legal work.
When Bridging Loans Make Sense
1) Buying Before Selling (Chain Breaks)
If your sale is delayed or a buyer withdraws, a bridging loan allows you to complete your purchase and repay the loan once your existing property sells.
2) Auction Purchases
Auction properties typically require completion within 28 days. Bridging finance is usually the only option fast enough to meet this deadline.
3) Refurbishment & Conversions
Properties needing significant work are often unmortgageable. Bridging allows you to buy, refurbish, and then refinance onto a long-term mortgage.
4) Unmortgageable Property
Lenders may consider properties with:
- Short leases
- Non-standard construction
- No kitchen or bathroom
- Fire damage
- Structural issues
5) Investor & Developer Projects
Including flips, refurbishments, land purchases and ground-up developments.
Types of Bridging Loans in 2025
Regulated Bridging
Used when the borrower will live in the property. Often used for chain breaks and buying before selling.
Unregulated Bridging
For investors and developers. Offers faster processing, higher LTVs and greater flexibility.
Light Refurbishment Bridging
For cosmetic upgrades. No major structural work.
Heavy Refurbishment Bridging
For structural changes, extensions, loft conversions and reconfigurations.
Development Finance
Used for ground-up builds or larger multi-unit projects.
Lender Criteria – What They Look At
- Loan-to-value (LTV): Typically 70–75%
- Property type and condition
- Borrower experience (for development)
- Exit strategy – the most important part
- Credit profile: minor issues often accepted
Exit Strategies
Your exit strategy must be clear from the beginning. Common exits include:
- Sale of the property
- Remortgaging to buy-to-let
- Refinancing onto a residential mortgage
- Sale of another asset
Costs of Bridging Finance in 2025
- Interest: 0.69% – 1.10% per month
- Arrangement fee: Usually around 2%
- Valuation: Varies based on property size and type
- Legal fees: Both sides require representation
- Broker fees: Depending on the case structure
Retained, Rolled or Serviced Interest
Retained
Interest is deducted from the loan at the start. No monthly payments.
Rolled
Interest accrues monthly and is added to the balance.
Serviced
You pay interest monthly, similar to a normal mortgage.
Advantages of Bridging Loans
- Fast completion
- Flexible underwriting
- Works for unmortgageable property
- Ideal for refurbishments and value-adding projects
- Useful in competitive or time-sensitive purchases
Risks & Mistakes to Avoid
- Poor exit strategies
- Underestimating refurb costs
- Choosing the wrong lender for the project type
- Not planning the refinance early enough
Is Bridging Right for You?
Bridging can be a high-performing tool when used correctly. Whether you’re buying quickly, investing in a renovation project or funding a development, the key is understanding your exit and working with a lender who fits your situation.
Speak With Us
If you want clear guidance, transparent terms and fast turnaround, our team at First Bridging Loans can help assess your scenario.
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