What is a Bridging Loan?
A bridging loan is a short-term loan secured against property. It is commonly used to “bridge” a gap between selling one property and purchasing another. Bridging loans are also used for property refurbishment, auction purchases, or to raise capital quickly.
These secured loans, typically for terms of up to 12 months, can be arranged much faster than standard mortgages—sometimes within days. Loan amounts are based on the property value used as security and the exit strategy in place to repay the loan.
What Is a Bridging Loan Broker?
A bridging loan broker assists borrowers in obtaining short-term loans to bridge the gap between property transactions. For landlords, for example, a broker might secure a bridging loan to help them buy a property at auction and give them the breathing space to organise a longer-term financial solution, such as a mortgage.
Why Use Bridging Loan Mortgage Brokers?
Bridging loan brokers are specialists who help clients secure short-term property finance. They understand the complex criteria that come with bridging finance and work to match borrowers with suitable lenders based on their specific circumstances.
Unlike high street lenders, many bridging loan providers are specialist lenders with more flexible criteria. A bridging broker can assess your financial position and access deals not publicly available. This may result in more competitive rates or terms tailored to your needs.
An experienced broker ensures the loan is structured correctly, particularly where multiple properties or complex exit strategies are involved. They also help avoid delays and issues that can arise with time-sensitive transactions.
Bridging Loan Mortgage Brokers | Common Uses for Bridging Finance
Chain Breaks: Purchase a new property before selling your existing one.
Auction Purchases: Buy a property at auction with completion required in 28 days.
Property Refurbishment: Fund renovation works where a traditional mortgage is unsuitable.
Land Purchase or Development: Secure funding for land or uninhabitable properties.
Business Purposes: Raise capital using property equity for business use.
Bridging Loan Eligibility Criteria
Lending criteria for bridging loans varies by lender, but typical requirements include:
Clear repayment plan (known as the “exit strategy”).
Sufficient equity in the property used as security.
Residential, buy-to-let, or commercial property acceptable.
- Clean or acceptable credit profile depending on lender.
- Valuation of the security property must support the loan amount.
- Loans available for individuals, companies, or trusts.
Lenders will also assess your ability to repay the loan within the agreed term. Bridging loans can be regulated or unregulated depending on the purpose of the loan and type of property involved.
Bridging Loans vs Other Finance Options
Bridging finance is not suitable for every situation. It’s important to consider alternatives depending on the need:
Standard Mortgages: Suitable for long-term borrowing but can take weeks to arrange.
Second Charge Mortgages: Useful if you have equity in your property but want to keep your current mortgage.
Personal Loans: Not secured on property but limited in amount and usually more expensive.
Equity Release (over 55s): Lifetime mortgages for older homeowners, often unsuitable for short-term borrowing.
A bridging broker can help you understand whether bridging is the best option, or whether another finance route is more appropriate.
What to Consider When Choosing Bridging Loan Brokers
When choosing a bridging loan broker, consider the following:
Are they experienced in bridging finance specifically?
Do they work with a broad range of lenders?
Are they authorised and regulated by the Financial Conduct Authority?
Can they offer both regulated and unregulated bridging loans?
Do they provide a clear explanation of all fees and charges?
Some clients may also prefer a broker based locally, or one with specific language support. Communication and speed of service are vital in bridging transactions, so ensure your broker has a strong track record.
Bridging Loan Mortgage Brokers | Bridging Finance Case Study
Client: Mr Patel, Property Investor, London
Purpose: Purchase and refurbish a mid-terrace property at auction
Loan Amount: £245,000
Security: Property purchased at auction, with a guide price of £280,000
Exit Strategy: Sale of refurbished property within 6 months
Mr Patel secured a bridging loan within five working days after his offer at auction was accepted. His current lender could not complete within the 28-day auction deadline. Using a specialist bridging broker, he arranged a 9-month term loan with interest rolled up. The property required light refurbishment and was then sold for £340,000, clearing the bridging loan in full and generating a profit.
This case highlights how bridging finance provided a fast and flexible solution where a traditional mortgage was not viable.
Is Bridging Finance Right for You?
If you need short-term property finance and have a clear repayment plan in place, bridging loans can provide a fast and flexible solution. However, this type of lending comes with risks if used incorrectly.
It is vital to get proper advice from a qualified bridging broker who understands the UK market and can recommend lenders based on your specific need.
To find out if bridging finance is right for you, speak to a trusted and experienced mortgage broker today.
