The short answer
A bridging loan is a short-term secured loan, typically used to "bridge" a gap between two financial events — most commonly between buying one property and selling another, or between purchasing a property and refinancing onto a long-term mortgage.
Unlike a standard mortgage, a bridging loan is designed to complete quickly (days or weeks, not months), is available on property that standard lenders won't touch, and charges interest monthly rather than annually.
- Loan terms: typically 1–24 months
- Interest rates: from around 0.79%/month
- Maximum LTV: up to 75% on residential property
- Completion: can be as fast as 5–10 working days
- Security: first or second charge on property
How does a bridging loan work?
A bridging loan works like this: you borrow a lump sum secured against a property (the "security"), use the funds for your intended purpose, and repay the loan — capital plus rolled-up interest — when a specified "exit event" occurs. That exit event is usually selling a property or refinancing onto a standard mortgage.
Interest is typically "rolled up" — meaning it accrues monthly and is repaid at the end of the term along with the capital, rather than being paid each month. This keeps your cashflow clear during the project or transition period.
What are bridging loans used for?
The most common uses are:
- Breaking a property chain — buying your new home before your existing property has sold
- Buying at property auction — where you must complete within 28 days and a mortgage cannot move fast enough
- Purchasing uninhabitable property — that mortgage lenders won't fund because it lacks a working kitchen or bathroom
- Refurbishment projects — buying a property to renovate and either sell or refinance
- Commercial property purchases — when speed is needed and a commercial mortgage is too slow
- Capital raising — releasing equity from a property you already own
- Preventing repossession — short-term injection of funds to resolve a mortgage arrears situation
Types of bridging loan
Open bridge
An open bridging loan has no fixed repayment date — you repay when your exit event occurs, within the agreed maximum term. These are used when the timing of the exit is uncertain (for example, waiting for a property sale where no buyer is yet in place).
Closed bridge
A closed bridging loan has a fixed repayment date — used when the exit event is confirmed and contracted (for example, you've exchanged on your property sale and know the completion date).
First charge vs second charge
A first charge bridging loan is secured as the primary loan against a property. A second charge sits behind an existing mortgage or first charge loan. Second charge bridging is more complex and typically slightly more expensive, but can be useful when you want to retain an existing mortgage.
How much does a bridging loan cost?
Bridging loan costs include:
- Interest rate — charged monthly, typically 0.79%–1.5%/month depending on LTV, property type, and borrower profile
- Arrangement fee — typically 1–2% of the loan amount, charged by the lender
- Valuation fee — for a RICS physical valuation (£500–£2,000+); waived on no-valuation products
- Legal fees — you pay your own solicitors and the lender's solicitors
- Exit fee — some lenders charge an exit fee (AF Credit does not)
Example: A £500,000 bridging loan at 0.85%/month, rolled up over 9 months, would accrue approximately £38,250 in interest. Add arrangement fee and legal costs and the total cost of borrowing would typically be in the region of £50,000–£55,000.
What is the exit strategy?
Every bridging loan application requires a credible "exit strategy" — the plan for how the loan will be repaid. A lender will assess this before offering. The most common exits are:
- Sale of the security property
- Sale of another property
- Refinancing onto a standard residential or buy-to-let mortgage
- Refinancing onto a commercial mortgage
- Receipt of funds from another source (inheritance, investment sale)
The stronger and more credible your exit strategy, the easier and cheaper bridging finance will be to arrange.
What is the maximum LTV on a bridging loan?
Maximum LTV on bridging loans varies by lender and property type:
- Residential property: up to 75% LTV with most lenders
- Commercial property: typically 60–65% LTV
- Semi-commercial: typically 65–70% LTV
- Land: typically 50–60% LTV
LTV is calculated against the open market value of the security property, assessed by a RICS valuer (or via AVM/desktop valuation for eligible properties).
How quickly can I get a bridging loan?
This varies significantly by lender. A specialist direct lender like AF Credit can:
- Issue indicative terms the same day you enquire
- Issue a formal offer within 3–5 working days of a formal application
- Complete the transaction in 5–10 working days on straightforward cases
The main bottleneck is usually the valuation (if a physical survey is required) and the legal process. Lenders with no-valuation options and in-house solicitor panels can move significantly faster.
How to choose a bridging lender
Key things to look for:
- Direct lender vs broker — a direct lender makes its own decisions; a broker sources from a panel of lenders. Both have merit but direct lenders typically move faster.
- Track record with your property type — not all lenders lend on all property types. Ensure your lender has genuine appetite for your specific asset.
- Valuation options — if speed is critical, look for a lender that offers AVM or desktop valuation on eligible properties.
- Transparent pricing — ensure you understand all fees before proceeding. Ask specifically about exit fees and any deferred charges.
- A named contact — bridging transactions move fast and communication matters. A lender who gives you a named contact from day one is far preferable to a call centre.
We offer bridging loans from £26,000 to £2 million across England and Wales, with same-day indicative terms and no-valuation options on eligible properties. Speak to our team today.
Get a quoteFrequently asked questions
Bridging loans secured against your primary residence (the home you live in) are regulated by the FCA. Bridging loans on investment property, commercial property, or any non-owner-occupied asset are typically unregulated. AF Credit operates across both regulated and unregulated bridging.
Yes, in many cases. Bridging lenders tend to be more flexible than mainstream mortgage lenders on credit history, because the primary security is the property rather than income. The key factors are the property value, the loan-to-value, and the credibility of the exit strategy.
If you cannot repay at the end of the agreed term, the lender may agree an extension — though this typically incurs additional fees and higher interest. If the loan cannot be extended and cannot be repaid, the lender has the right to enforce their charge and sell the security property. It is essential to have a realistic exit strategy before taking a bridging loan.
Yes. You will need your own solicitor to act for you, and the lender will also instruct solicitors (whose costs you typically pay). Some lenders offer dual representation — one firm acting for both parties — which reduces cost and time.