Short-term property finance when speed and flexibility matter
Bridging finance is a short-term lending facility secured against property. It is designed for situations where funds are needed quickly and a longer-term finance solution either cannot be arranged in time or is not yet appropriate given the state of the property or the transaction.
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Bridging finance is a valuable tool in property finance, especially where speed and flexibility are important. But it works best when the full transaction has been thought through carefully, including how the borrowing will be repaid.
When bridging finance is used
Purchasing a property at auction, where completion is required within 28 days
Buying a new property before an existing one has sold
Funding the purchase of a property that is uninhabitable or unmortgageable in its current condition
Raising funds quickly against a property to take advantage of a time-sensitive opportunity
Funding a refurbishment or light development before refinancing onto a longer-term product
Chain break situations where a transaction would otherwise collapse
The exit route is not optional
Every bridging finance application requires a credible exit route. This is the defined plan for how the bridge will be repaid at the end of the term. Lenders will assess the exit as carefully as they assess the property and the borrower.
A weak or vague exit strategy is one of the most common reasons bridging finance cases run into difficulty or cost more than expected. We look at the exit route as a priority, not an afterthought.
Sale of the property once refurbishment or development is complete
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Receipt of funds from another defined source within the term
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Refinancing onto a commercial mortgage or buy-to-let mortgage once the property is tenanted or in a condition that conventional lenders will accept
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Sale of another property releasing funds to repay the bridge​​
Common exit routes include:
What bridging finance costs
Bridging finance is more expensive than long-term property lending. Interest is typically charged monthly rather than annually, and rates vary depending on the lender, the loan to value (LTV), the property type, the exit route and the borrower's background. Arrangement fees and exit fees may also apply.
Understanding the total cost of a bridge, not just the monthly rate, is important before committing. We will always set out the full costs clearly so you can make an informed decision.
What lenders look for when assessing a Bridging applciation
The Property
​The type, location, condition and valuation
The Loan to Value
Most bridging lenders will go up to 75% of the current value, some higher depending on the exit
The Exit route
How, when and the crediblity that the bridge will be repaid
The Borrower
The background, experience, credit history and financial position
The Legal team
Bridging transactions require experienced solicitors and slow legal work can put a transaction at risk