Bridging finance is a short-term loan secured against property, designed to 'bridge' a gap in funding. Whether you're buying at auction, breaking a chain, or funding a refurbishment, bridging can provide fast, flexible capital when you need it most.
What Is Bridging Finance?
A bridging loan is a short-term secured loan, typically lasting 1–24 months. It's used when you need to act quickly or when traditional mortgage finance isn't available — for example, buying an unmortgageable property, completing an auction purchase within 28 days, or funding refurbishment works.
Typical Costs
- • Interest — typically 0.55%–1.5% per month, often rolled up.
- • Arrangement fee — usually 1–2% of the loan amount.
- • Valuation and legal fees — borrower pays both sides.
- • Exit fee — some lenders charge 1% on redemption.
Key Risks
The main risk with bridging is failing to execute your exit strategy on time. If you can't repay the loan, the lender can repossess the security property. Always have a clear, credible exit plan before proceeding.