AF Credit · Direct Lender · England & Wales

Residential
Bridging Loans

Short-term finance secured against residential property. Break a chain, buy before you sell, fund an uninhabitable property, or complete an auction purchase — often within 5–10 working days.

Get same-day terms Call 01451 514 563
Rates from
0.79%/mo
Max LTV
75%
Loan range
£26k–£2m
Term
3–24 months
🏠

Up to 75% LTV

Lend up to 75% of open market value on first charge. Second charge also available alongside an existing mortgage.

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Completes in days

Same-day indicative terms. Solicitors instructed within 12 hours. AVM and desktop valuation routes available on eligible properties.

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Vacant & tenanted

No access needed for AVM or desktop valuation routes. Works equally well on vacant, tenanted, or uninhabitable property.

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England & Wales

We lend across England and Wales on houses, flats, HMOs, buy-to-let and mixed residential assets.

Definition

What is a residential bridging loan?

A residential bridging loan is a short-term, asset-backed loan secured against a residential property. It is designed to bridge a temporary gap in funding — between buying and selling, between a purchase and a mortgage, or between a property's current condition and the point at which it qualifies for long-term finance.

The fundamental difference between a bridging loan and a mortgage is its purpose and structure. A mortgage is designed to be held for years. A bridging loan is a tool: you use it to solve a specific short-term problem, then exit onto something permanent — either a sale or long-term finance.

Terms typically run from 3 to 24 months. Interest is usually retained — calculated upfront and deducted from the gross advance — so there are no monthly payments while the loan is live. You repay the capital and any outstanding interest when you exit: either by selling the property or refinancing onto a mortgage.

Residential bridging loans are available on first and second charge basis. First charge means the bridging lender holds the primary security over the property (no existing mortgage). Second charge means the bridge sits behind an existing mortgage, with the bridging lender in a subordinate security position.

Key facts at a glance

Loan size: £26,000 to £2,000,000
Maximum LTV: 75% of open market value
Rates: from 0.79% per month
Term: 3 to 24 months
Interest: retained, rolled, or serviced
Charge: first or second
Geography: England and Wales
Valuation: AVM, desktop, or full physical
Adverse credit: considered case by case
Decision speed: same-day indicative terms

What makes it different from a mortgage?

Mortgage lenders assess income, affordability, and property condition over a long term. Bridging lenders assess asset value, LTV, and exit strategy. A property that fails a mortgage application — because it has no working kitchen, or the purchase is needed in 10 days — can still qualify for a bridging loan.

Mechanics

How does a residential bridging loan work?

Understanding the mechanics of a bridging loan helps you structure the right deal and avoid surprises at drawdown. Here is what happens at each stage.

1. Enquiry and terms

You contact the lender and provide the basic facts: the property address and type, the loan amount needed, the intended term, and the exit strategy. AF Credit can typically issue indicative terms the same day.

2. Valuation

The lender assesses the value of the security property. This can be via an AVM (automated valuation model), a desktop valuation (a RICS surveyor working remotely), or a full physical inspection. The loan is structured against the confirmed value — the LTV is calculated against this figure, not the purchase price.

3. Credit decision and offer

The lender underwrites the case — considering the property, the LTV, the exit strategy, and the borrower's background. AF Credit makes decisions in-house, so there is no external credit committee. A formal offer follows, setting out the gross loan, net loan, interest rate, fees, and conditions.

4. Legal process

Solicitors are instructed — one acting for you, one for the lender, or a single firm on dual representation. They handle title investigation, Land Registry registration, and the transfer of funds. AF Credit can instruct solicitors within 12 hours of a credit decision. Dual representation speeds this process significantly.

5. Drawdown

Once the legal charge is registered and conditions are met, funds are released. On a retained interest deal, the gross loan is drawn and the retained interest is held by the lender — you receive the net advance. On a serviced deal, the full gross loan is paid to you and you pay interest monthly.

6. Exit and redemption

When your exit occurs — you sell the property or refinance — the bridging loan is redeemed. The lender is repaid from the proceeds. Any unused retained interest is refunded to you. AF Credit charges no early repayment penalty, subject to a three-month minimum interest period.

Gross vs net loan — what's the difference?

This is one of the most common points of confusion in bridging finance.

Gross loan: the total facility size — capital plus retained interest plus fees. This is the amount secured against the property and used to calculate LTV.

Net loan: the cash you actually receive at drawdown — after retained interest and fees have been deducted.

Example: gross loan £540,000 at 75% LTV means property value £720,000. The net loan — the cash you receive — might be £485,000 after £36,000 retained interest and £19,000 in fees are deducted. Always ask lenders to confirm both the gross and net figures.

Some lenders quote LTV on the net loan, which makes their rates look more favourable. Always compare on gross LTV for a fair comparison.

Use cases

Who uses residential bridging finance?

Residential bridging finance is used across a wide range of scenarios where speed, flexibility, or a property's condition makes a standard mortgage unsuitable. Below are the most common situations — each with a realistic example of how the loan works in practice.

Chain break

Buying before you sell

Your buyer pulls out two weeks before exchange. You want to complete on your new property regardless. A bridging loan secured against your existing home gives you the capital to proceed — you repay the bridge when your existing property eventually sells. You stay in control, not at the mercy of a chain you cannot manage.

Auction purchase

28-day completion deadline

Auction contracts require completion within 28 days — sometimes less. Standard mortgage lenders need 4–12 weeks at best. A residential bridging loan can complete in 5–10 working days on straightforward cases with an AVM or desktop valuation. This makes bridging the standard tool for residential auction purchases across the UK.

Uninhabitable property

No kitchen. No bathroom. No problem.

A standard mortgage requires the property to be habitable. Bridging lenders do not. If you are purchasing a derelict house, a fire-damaged flat, a property with no roof, or a building that has failed a mortgage valuation on condition grounds, a bridging loan can fund both the purchase and the refurbishment before you refinance.

Probate / inherited property

Buying an estate property quickly

Executors selling a probate property often want a clean, fast transaction rather than waiting for the highest bidder to arrange a mortgage. A bridging loan buyer can complete in days, with certainty — making them highly attractive to estate agents managing probate sales. Alternatively, a bridging loan can be raised against an inherited property to fund other purchases while a sale is arranged.

Down valuation / mortgage declined

When your mortgage falls through

A surveyor down-values the property, your mortgage lender withdraws, and exchange is in 5 days. A bridging loan does not rely on a traditional affordability assessment — it is secured on the property and assessed on the exit strategy. A bridging loan can step in at short notice to save a transaction that a mortgage lender has abandoned.

Buy-to-let acquisition

Completing at speed for a BTL

You have found a buy-to-let at below market value — a distressed sale, a landlord exiting the market, or a motivated probate seller — and the vendor wants to complete quickly. A bridging loan lets you move at the vendor's pace. Once the property is tenanted and settled, you refinance onto a standard BTL mortgage at a more competitive long-term rate.

Developer exit / rebridge

When a bridge is expiring

Your development or refurbishment is complete but the sale is taking longer than expected. Your existing bridging lender won't extend and default interest is about to kick in. A rebridge — replacing one bridge with another — buys you time to complete the sale without the penalty of default rates. AF Credit specialises in fast rebridges where other lenders have refused to extend. See a real rebridge case study.

Capital raising

Releasing equity quickly

You own a residential property outright or with equity and need capital quickly — for a business opportunity, a time-sensitive investment, or a property auction. A second charge bridging loan can be raised against your existing property without disturbing the existing mortgage, giving you access to capital at speed without selling an asset you want to keep.

Refurbishment

Funding renovation works

You want to purchase a tired property, renovate it, and sell or remortgage at an improved value. A refurbishment bridging loan can fund both the acquisition and the works — with staged drawdown of the refurbishment element in some cases — before you exit onto a mortgage or through a sale. See our dedicated refurbishment bridging page.

Regulation

Regulated vs unregulated residential bridging

Not all residential bridging loans are regulated in the same way. The distinction matters — it affects the process, the documentation required, and your consumer protections.

Regulated bridging loans

A bridging loan is regulated by the FCA when the borrower — or a close family member — intends to occupy the property being used as security as their main residence at any point during the loan term.

Regulated bridging is subject to the FCA's Mortgage Credit Directive (MCOB) rules. This means the lender must carry out a suitability assessment, provide a standardised European Standardised Information Sheet (ESIS), and ensure the product is appropriate for the borrower's circumstances.

Examples: chain-break loan where you are buying your next home; capital raise against your own home; loan against a property you are planning to move into.

Unregulated bridging loans

A bridging loan is unregulated when neither the borrower nor a close family member will occupy the security property. The vast majority of residential bridging transactions — buy-to-let acquisitions, refurbishment flips, auction purchases for resale, developer rebridges — fall into this category.

Unregulated bridging does not mean unprotected. The lender is still subject to general consumer credit and financial services law, and AF Credit applies the same credit discipline and transparency to every case regardless of regulation status.

Examples: auction purchase of a property you intend to sell; BTL acquisition; refurbishment loan on an investment property; capital raise for a business purpose.

FeatureRegulated bridgingUnregulated bridging
FCA oversight✓ Yes — MCOB applies✗ No FCA regulation
Borrower occupies property✓ Yes (or family member does)✗ No — investment use only
Suitability assessment required✓ Yes✗ No formal requirement
DocumentationMore extensive (ESIS required)Lighter — faster to process
Common usesChain break (own home), capital raise against homeBTL, auction, refurbishment, developer exit
Typical speedSlightly slower (compliance steps)Faster — can complete in days
⚠ Important: AF Credit does not offer regulated bridging loans

Where your loan falls within FCA regulation, we will inform you and, with your permission, introduce you to one of our trusted FCA-authorised intermediary partners, who will handle your application and any regulated advice required.

Loan structure

Open vs closed bridging loans

Every bridging loan is either open or closed. The difference affects your rate, the lender's risk assessment, and how the loan is structured.

Open bridge

An open bridging loan has no fixed repayment date. You have a clear exit strategy — sale of a property, refinance — but no contractual date by which the exit will occur. This is the more common structure.

Open bridges require the lender to have confidence in the exit strategy even without a hard deadline. As a result, they typically carry a slightly higher rate than closed bridges, and the lender's exit analysis is more thorough.

Common when: your property is on the market but not yet under offer, or you are refinancing but haven't yet had a mortgage offer issued.

Closed bridge

A closed bridging loan has a specific repayment date tied to a contractual event — typically exchange of contracts on the sale of a property, where completion is legally certain within a defined period.

Closed bridges carry lower risk for the lender because the exit is contractually secured. This usually translates to a slightly lower rate and a more straightforward underwriting process.

Common when: you have exchanged on your property sale and are waiting for completion, or you have a mortgage offer in place and are waiting for funds to release.

⚠ Important: most bridging loans are open

Despite the lower theoretical rate on a closed bridge, the vast majority of residential bridging transactions are open — because most exits are not yet contractually fixed at the time the bridge is needed. A lender quoting only on closed bridges and presenting an attractively low rate should be questioned on what rate applies to an open bridge.

Interest structure

Interest options: retained, rolled, and serviced

How interest is handled on a bridging loan significantly affects the net loan you receive, the LTV calculation, and your cash flow during the loan term. There are three main methods.

MethodHow it worksMonthly cashflow impactEffect on net loanBest suited to
Retained interest Interest for the full term is calculated upfront and deducted from the gross advance at drawdown None — no monthly payments Lower net advance (interest deducted) Borrowers with no monthly cashflow, refurbishment, auction
Rolled interest Interest accrues monthly and is capitalised to the loan balance — paid in full at redemption None — interest compounded monthly Higher redemption figure than retained Uncertain exit timeline, flexibility required
Serviced interest Borrower pays interest monthly, similar to a mortgage Monthly payment required Higher net advance (no interest deducted) Borrowers with regular income, larger loans, lower effective LTV

Retained interest — the most common method

On a retained interest deal, the lender calculates the interest for the full term — say 12 months at 0.85% per month on £500,000 gross = £51,000 — and deducts this from the gross loan at drawdown. You receive the net loan. If you repay early, any unused months of retained interest are refunded.

This is the most common structure in UK bridging finance because it requires no monthly cashflow management and suits the typical use cases: refurbishment, chain break, and auction purchase where cash flow is tied up in the project.

Rolled vs retained — which costs more?

Rolled interest compounds monthly because unpaid interest is added to the loan balance, which then itself generates interest. On a long-term facility or a loan that runs to full term, rolled interest will cost slightly more than retained.

However, rolled interest provides more flexibility: if you repay in month 6 on a 12-month facility, you only pay 6 months' interest with no penalty. Retained interest effectively locks in the cost at the full term — though reputable lenders refund unused months.

Loan size and LTV

How much can I borrow on a residential bridging loan?

The amount you can borrow depends primarily on two things: the value of the property being offered as security, and the loan-to-value (LTV) the lender is prepared to lend against it.

AF Credit lends from £26,000 to £2,000,000 on individual residential properties across England and Wales. The maximum LTV is 75% of the open market value on first charge.

How LTV is calculated on a bridging loan

LTV on a bridging loan is calculated against the gross loan — the total facility including retained interest and fees — divided by the confirmed property value. This is different to a mortgage, where LTV is calculated on the capital amount only.

Example: property value £700,000. Maximum 75% gross LTV = £525,000 gross. On a 0.85% rate for 10 months, retained interest ≈ £42,000, fees ≈ £10,500. Net advance ≈ £472,500. Always confirm net vs gross with your lender before proceeding.

Second charge LTV

On a second charge bridging loan, the LTV calculation includes the balance of the existing first charge. If a property is worth £500,000 and carries a £200,000 mortgage, the combined LTV on a £75,000 second charge bridging loan would be £275,000 ÷ £500,000 = 55% — well within the 75% maximum.

What affects the LTV a lender will offer?

  • Property condition — uninhabitable or heavily distressed properties typically attract a lower LTV (55–65%) than standard habitable stock
  • Location — properties in thin markets with limited comparable sales, or in remote rural locations, may be capped at lower LTVs
  • Property type — flats above commercial, ex-local authority, and non-standard construction may attract reduced LTVs
  • Exit strength — a weak or speculative exit strategy typically leads to a lower maximum LTV offer
  • Loan size — smaller loans (under £100k) and very large loans (over £1m) may be assessed at tighter LTVs
  • Valuation method — AVM and desktop valuations tend to be used at more conservative LTVs than full physical inspections
Pricing

Residential bridging loan rates explained

Bridging loan rates are quoted monthly, not annually. AF Credit offers residential bridging loans from 0.79% per month. Understanding how rates are set — and what the real cost of the loan is — helps you make an accurate comparison between lenders.

What does 0.79% per month actually cost?

Monthly rates can look low in isolation. Here is the equivalent annual cost at different monthly rates on a £300,000 gross loan:

Monthly rate6-month interest12-month interestEquiv. annual rate
0.79%/month£14,220£28,440~9.5%
0.85%/month£15,300£30,600~10.2%
1.00%/month£18,000£36,000~12.0%
1.25%/month£22,500£45,000~15.0%

Figures based on £300,000 gross loan with retained interest. Actual cost depends on gross loan amount and retained months.

What determines your rate?

  • LTV — lower LTV = lower rate. A 50% LTV loan typically qualifies for the lender's best rate. A 72% LTV loan will be priced higher to reflect the increased risk.
  • Exit strategy — a closed bridge with exchange already in place will attract a lower rate than an open bridge where a sale is speculative.
  • Property type and condition — uninhabitable or non-standard properties carry higher risk and are typically priced accordingly.
  • Loan size — larger loans often attract better rates. Sub-£100k loans may be priced higher due to fixed cost disproportionality.
  • Term — longer terms can mean a slightly lower monthly rate but a higher total cost. Assess rate against total interest payable, not just monthly rate.
  • Borrower background — adverse credit does not preclude a loan, but severe or recent credit events may affect pricing.
Rate vs. total cost — what to actually compare

Two lenders quoting 0.85%/month on the same deal can produce significantly different total costs if one charges a 2% arrangement fee and the other charges 1%, or if one charges an exit fee and the other does not. Always ask for the total cost of the loan — arrangement fee, interest, exit fee, and legal costs — before making a decision based on rate alone.

Costs

Residential bridging loan fees — what to expect

Bridging loans involve more fee types than a standard mortgage. Understanding each one prevents surprises at drawdown.

Arrangement fee
1–2% of loan
Charged by the lender on completion. Can be deducted from the gross advance or paid separately. This is the most significant fixed cost alongside interest.
Monthly interest
From 0.79%/mo
The core cost of the loan. On retained interest deals, calculated for the full term and deducted at drawdown. Unused months refunded on early exit.
Exit fee
0–1% of loan
Charged by some lenders at redemption. AF Credit charges an exit fee on some products — this is always disclosed upfront and included in the total cost illustration.
Legal fee (borrower)
£1,000–£3,000
Your solicitor's costs for handling the loan documentation, title investigation, and registration. Lower on dual representation where one firm acts for both parties.
Legal fee (lender)
£500–£2,000
The lender's legal costs, typically paid by the borrower. On dual representation deals, this is combined with your fee — one firm, one bill.
Valuation fee
£0–£1,500+
AVM valuations are often free or very low cost. Desktop valuations typically cost £300–£600. Full physical inspections from £600 to £1,500+ depending on property value and complexity.
Administration fee
£0–£1,000
Charged by some lenders to cover processing and underwriting costs. AF Credit charges a standard administration fee disclosed in the initial terms.
Valuations

Valuation routes for residential bridging loans

Valuation is one of the most misunderstood aspects of residential bridging finance. The route taken significantly affects both the cost and speed of completing your loan.

Valuation methodHow it worksTypical costTypical timeWhen available
AVM (Automated Valuation Model) Algorithm-driven desktop assessment using comparable sales, Land Registry data, and market analytics (Hometrack, e.surv etc.) £0–£150 Same day Standard habitable property, lower LTV, strong comparable evidence
Desktop valuation RICS-qualified surveyor prepares a written report using comparables, floor plans, and online data — no site visit £300–£600 1–3 days Standard residential property, moderate LTV, where AVM evidence is limited
Full physical inspection RICS surveyor attends and inspects the property in person, producing a full written valuation report £600–£1,500+ 1–3 weeks (scheduling + report) Uninhabitable property, unusual construction, high LTV, large loan, complex or unique asset

When can I use a no-valuation route?

Not every property can be funded via AVM or desktop valuation. The key factors AF Credit considers are:

  • Conservative LTV — typically below 65–70% for a desktop; lower for AVM
  • Standard property type — house or flat in habitable condition, not heavily unusual
  • Good comparable sales evidence — the AVM or desktop can confidently conclude value
  • Strong exit — live sale, recent exchange, or refinance in progress

Where these factors align, a no-valuation route avoids the delay and cost of a physical inspection. See our no-valuation bridging loans and desktop valuation bridging loans pages for more detail.

Why does a physical valuation take so long?

A full physical valuation has two time costs: scheduling the surveyor's site visit (typically 3–7 days), and the time to produce the written report (3–7 additional days). On a property in a remote area or with a specialist requirement, this can stretch to 3 weeks or more.

When time is critical — an auction deadline, an expiring bridge, a motivated vendor — a no-valuation or desktop route can mean the difference between completing in 5 days and completing in 4 weeks. Always discuss valuation options at the outset of your enquiry.

Criteria

Residential bridging loan eligibility

Bridging loan eligibility is assessed differently from a mortgage. It is primarily asset-based — meaning the property, LTV, and exit strategy carry more weight than income or employment status.

CriteriaDetails
Loan size£26,000 – £2,000,000
Maximum LTV75% of open market value (first charge)
Rates from0.79% per month
Term3 – 24 months
Property typesHouses, flats, HMOs, uninhabitable residential, mixed residential, BTL
Property conditionAny condition accepted — including derelict, fire-damaged, uninhabitable
Charge positionFirst or second charge
Interest optionsRetained, rolled up, or serviced
Adverse creditConsidered case by case — CCJs, defaults, missed payments assessed individually
GeographyEngland and Wales only

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What about adverse credit?

Bridging lenders assess credit differently from mortgage lenders. Because the loan is short-term and the exit is typically a sale or refinance rather than long-term income serviceability, adverse credit is not an automatic barrier.

AF Credit reviews the context of credit issues — a historic CCJ from several years ago on an otherwise clean file is treated very differently from a recent default or active IVA. The key question is whether the adverse event affects the credibility of the exit strategy.

Why lenders decline bridging cases

Even specialist bridging lenders decline cases. The most common reasons:

  • LTV exceeds the lender's maximum for the property type
  • Exit strategy is unclear, speculative, or single-point
  • Property is in Scotland, Northern Ireland, or a very remote location
  • Short lease (under 70 years) or complex title issues
  • Loan is below the lender's minimum or above their maximum
  • Recent bankruptcy or IVA that is still active
  • Valuation evidence is thin or property is genuinely unique
Repayment

Exit strategies for residential bridging loans

The exit strategy is the most important thing a bridging lender assesses. It is how the loan gets repaid — and a lender that does not scrutinise the exit is not doing its job properly. AF Credit reviews exit strategies at the enquiry stage, before any credit commitment.

A credible exit should be specific, realistic, and within the loan term. Ideally, a borrower has both a primary and a secondary exit — if the sale falls through, the refinance is available, and vice versa.

Sale of the security property

The most straightforward exit. The bridging loan is secured against the property being sold. On completion of the sale, the bridge is redeemed from the sale proceeds. Works best where the property is already on the market or under offer.

Sale of another property

The bridge is secured against property A, but the exit comes from the sale of property B. Common on chain-break scenarios where the existing property hasn't yet sold. The lender needs confidence that property B is realistically marketable within the term.

Refinance to a residential mortgage

The property is currently uninhabitable or the borrower needs to move quickly. Once the property is refurbished and meets standard mortgage criteria, you refinance onto a residential repayment or interest-only mortgage. The lender will assess whether you are likely to qualify for a mortgage at exit.

Refinance to a buy-to-let mortgage

Common on investment property acquisitions. Once the property is tenanted and meets BTL mortgage criteria — minimum rental income coverage, acceptable condition — you refinance onto a BTL product. A dual exit (sale or BTL) significantly strengthens the overall case.

Development finance or further bridging

For properties mid-refurbishment where works will take longer than the initial bridge term, the exit may be a development finance facility to continue the project, or a rebridge at a higher post-works value. Lenders will assess whether this secondary exit is realistic.

Business cash flow or asset sale

On capital raising bridging loans, the exit may be repayment from business income, the receipt of a trade, or the sale of another investment. These exits require careful assessment — the lender needs evidence that the cash will materialise within the term.

⚠ What happens if the exit fails?

If the bridging loan is not repaid by the end of the term, the lender can begin enforcement proceedings — including repossession and sale of the security property. Default interest rates (typically 1.5–3% per month, significantly higher than the standard rate) also begin to accrue. This is the primary risk of bridging finance: the exit must be realistic and achievable within the term. Over-relying on a single exit strategy is the most common cause of bridging loan distress.

Comparisons

How residential bridging compares

Bridging loans are one tool among several. Understanding how they compare to alternatives helps you confirm you are using the right product for your situation.

Residential bridging loan vs standard mortgage

FeatureResidential bridging loanStandard mortgage
Completion time5–10 working days (AVM/desktop)4–12 weeks
Term3 to 24 months2 to 30 years
Monthly rateFrom 0.79%/month (~9.5% annually)From ~4.5–6% per year
Monthly paymentsNone on retained interestYes — capital and/or interest
Uninhabitable property✓ Accepted✗ Declined
Income assessmentNot required for sale exitMandatory affordability assessment
Adverse credit✓ Considered✗ Usually declined
Early repaymentNo ERC (subject to 3-month minimum)Early repayment charges often apply
PurposeShort-term solution, specific problemLong-term holding product

Residential bridging vs development finance

FeatureResidential bridgingDevelopment finance
Typical useLight to medium refurbishment, purchase, chain breakHeavy development, ground-up construction, large-scale conversion
Loan structureSingle drawdown at completionStaged drawdown as works progress
MonitoringMinimal — occasional check onlyQuantity surveyor monitors progress
CostLower arrangement fees, simpler structureHigher arrangement fees, monitoring costs, QS fees
Best forCosmetic to moderate refurbishment, speed-critical purchasesStructural works, conversion, ground-up build
Speed to drawdownFaster — days to weeksSlower — weeks to months (planning, QS)

Residential bridging vs commercial bridging

FeatureResidential bridgingCommercial bridging
SecurityHouses, flats, residential propertyOffices, retail, industrial, mixed-use
Maximum LTVUp to 75%Typically 60–70%
Regulated option✓ Yes (if owner-occupied)✗ No — always unregulated
Valuation complexityGenerally lower — established comparablesHigher — income-based valuation methods
Exit routesSale or residential/BTL mortgageSale or commercial mortgage
Typical useChain break, refurbishment, auctionBusiness purchase, commercial refurbishment, mixed-use
Risks

Risks and disadvantages of residential bridging loans

Bridging finance is powerful when used correctly and expensive when used without proper planning. These are the real risks — not the ones a lender glosses over.

⚠️

High cost compared to long-term finance

A bridging loan at 0.85%/month costs around 10.2% annually — significantly more than a standard mortgage. This is appropriate when the loan runs for 6–12 months and solves a specific problem. It is costly if used as a substitute for a mortgage because you could not wait or qualify. Always have a clear, fast exit strategy.

🏚️

Security property can be repossessed

A bridging loan is a secured loan. If you cannot repay — because the sale falls through, the refinance does not materialise, or the market moves against you — the lender can appoint a receiver and sell the property to recover their funds. This risk is real and should be factored into every bridging decision.

📈

Default interest is punitive

If the loan is not repaid by the term date, default interest rates kick in — typically 1.5–3% per month, compared to the standard 0.79–1.25%. A loan that runs 3 months into default can accrue interest at rates that erode equity rapidly. Always plan for the exit to complete before the term, not on the last day.

📉

Property value can fall

If the market falls during the loan term and you are near the maximum LTV, the lender may have difficulty recovering their full loan in a forced sale. While this is primarily a lender risk, it can also prevent you from refinancing if your LTV has increased beyond the refinance lender's maximum — trapping you in the bridge.

⚖️

Legal and title complications

Short leases, restrictive covenants, flying freeholds, rights of way disputes, or Land Registry complications can delay or prevent completion entirely. A bridging lender may accept these issues with conditions; a mortgage lender at exit may not. Always get legal advice on title before committing to a bridge that relies on a mortgage as the exit.

🔨

Refurbishment overrun and cost increase

If the exit relies on a refurbished property reaching a higher value to refinance or sell, delays or cost overruns in the refurbishment can extend the bridging term and increase costs. Contractors going bust, planning delays, and material shortages have all caused real bridging distress in practice. Budget contingency into your project cost from day one.

Why AF Credit

The residential bridging lender that decides — and completes — in-house.

AF Credit is a direct principal lender. That means we lend our own money, make our own credit decisions, and communicate directly with borrowers and their solicitors — no committee, no external approval process.

In practice, this means same-day indicative terms on qualifying cases, solicitor instruction within 12 hours of a credit decision, and a single point of contact who knows your case from enquiry through to completion.

We specialise in cases that other lenders find difficult: uninhabitable properties, complex titles, tight deadlines, adverse credit, no-valuation transactions, and rebridges where an existing lender has refused to extend. These are not edge cases for us — they are the core of what we do.

Get same-day termsCall 01451 514 563
Direct lender — no committees
Same-day indicative terms
AVM & desktop valuation options
Dual representation legals available
Complex cases welcome
No early repayment charges
First and second charge
Rates from 0.79%/month
0.79%Rates from
75%Max LTV
12 hrsInto legals
£2mMax loan
Evidence

Real residential bridging loans we've completed

These are real deals with real numbers — not illustrative examples. They show the types of residential bridging situations AF Credit completes, and how we approach cases where other lenders have declined or been too slow.

📍 Leyton, East London · Rebridge · No Valuation

Existing lender refused to extend. Completed in 10 days.

£487,500Net loan
65%LTV
10 daysTo complete
 📍 Penge, SE20 · Rebridge · Desktop Valuation

Bridge expiring. Buyer renegotiating. Default interest looming.

£485,000Net loan
65%LTV
No ValDesktop only
 📍 Walton-on-Thames, Surrey · Capital Raise · No Valuation

£1,000,000 raised. No new valuation required.

£1,000,000Net loan
40%LTV
No ValExisting RICS accepted

View all residential bridging case studies →

Common questions

Residential bridging loan FAQs

Everything borrowers commonly ask about residential bridging loans — answered plainly by people who underwrite them.

A residential bridging loan is a short-term secured loan against a residential property, typically running 3 to 24 months. It bridges a financial gap — between buying and selling, between purchase and mortgage, or between a property's current condition and the point it qualifies for long-term finance. Interest is usually retained (no monthly payments) and the loan is repaid in full at exit via sale or remortgage. AF Credit lends from £26,000 to £2,000,000 at rates from 0.79% per month, up to 75% LTV.

AF Credit issues same-day indicative terms on qualifying cases — no credit search at this stage. Once you proceed, solicitors can be instructed within 12 hours of a credit decision. On straightforward cases with an AVM or desktop valuation, completion is often achievable in 5–10 working days. Cases requiring a full physical valuation typically take 2–4 weeks. Dual representation legals and a no-search indemnity policy are both available to shorten the legal timeline.

AF Credit lends up to 75% gross LTV on residential property. Gross LTV is calculated on the total gross facility — including retained interest — divided by the open market value. Uninhabitable properties, unusual constructions, and properties in thin markets may be funded at lower LTVs (typically 55–65%). Second charge lending is available alongside an existing mortgage.

Yes — chain breaks are one of the most common uses for a residential bridging loan. If your buyer pulls out or delays, a bridging loan lets you complete your purchase while you remarket your existing property. The bridge is secured against your existing property, or sometimes against both properties. You repay it when your existing home eventually sells. This removes chain dependency entirely and gives you control over the timeline.

Yes. Standard mortgage lenders require a working kitchen, bathroom, and for the property to be immediately habitable — bridging lenders do not. AF Credit can fund the purchase of derelict, fire-damaged, or structurally compromised properties across England and Wales. The exit is typically refinance onto a residential or BTL mortgage once works are complete and the property meets standard lending criteria. See our refurbishment bridging loans page for more on funding works.

A bridging loan is regulated (FCA-regulated, subject to MCOB rules) when the borrower or a close family member intends to occupy the security property as their main residence. Examples: chain-break loan on your own home; capital raise against a property you live in. A bridging loan is unregulated when the property is an investment — buy-to-let, refurbishment for sale, auction purchase. Regulated bridging carries additional consumer protections and a more formal assessment process. Unregulated bridging is faster and more flexible.

Not always. AF Credit offers three valuation routes: AVM (automated, same-day, lowest cost), desktop valuation (RICS surveyor working remotely, 1–3 days), and full physical inspection (surveyor attends, 1–3 weeks). Standard habitable residential properties at conservative LTVs often qualify for AVM or desktop valuation — saving significant time and upfront cost. Uninhabitable, unusual, or large-loan cases typically require a full physical inspection. Speak to us about which route applies to your property at the enquiry stage.

Yes. AF Credit considers adverse credit on a case-by-case basis. As a direct lender, we make our own credit decisions — CCJs, missed payments, defaults, and satisfied mortgage arrears are not automatic declines. What matters most is the property, the LTV, and the credibility of the exit strategy. A historic CCJ on an otherwise clean file is treated very differently from an active IVA or recent bankruptcy. The key question is whether the credit issue affects your ability to exit the loan within the term.

The main costs are: arrangement fee (1–2% of the gross loan), monthly interest (from 0.79%/month), legal fees (borrower's solicitor and lender's solicitor — reduced on dual representation), and the valuation fee (£0 for AVM, £300–600 for desktop, £600–1,500+ for full inspection). Some lenders also charge an exit fee (0.5–1%) and an administration fee. AF Credit does not charge a broker fee.

Retained interest means the projected interest for the full loan term is calculated upfront and deducted from the gross advance at drawdown. You receive the net loan amount with no monthly interest payments to manage. When you exit early, any unused months of retained interest are refunded. Example: on a £500,000 gross loan at 0.85%/month over a 12-month term, retained interest of £51,000 would be deducted, giving a net advance of £449,000 (less fees). This is the most common interest structure for UK residential bridging loans.

Yes — bridging finance is the standard funding tool for residential auction purchases in the UK. Auction contracts typically require completion within 28 days of the sale, which is impossible to achieve with a standard mortgage. AF Credit can provide same-day indicative terms on auction properties, and straightforward cases with an AVM valuation can often complete in 5–7 working days. We can provide a Decision in Principle letter before the auction if required. See our dedicated auction bridging loans page for more.

The two most common exit strategies are: (1) sale of the security property or another property you own — the bridge is redeemed from the sale proceeds at completion; or (2) refinance onto a standard residential or buy-to-let mortgage — once the property is habitable, tenanted, or meets standard mortgage criteria. AF Credit reviews your exit strategy at the enquiry stage. There are no early repayment charges, subject to a minimum three-month interest period. A dual exit strategy — both sale and refinance available — is preferred and strengthens every application.

A first charge bridging loan is secured against a property with no existing mortgage — the bridging lender holds the primary legal charge over the asset. A second charge loan sits behind an existing mortgage, with the bridging lender in a subordinate security position. Second charge bridging is useful when you want to raise capital against a property you already own without disturbing or remortgaging the existing finance. AF Credit lends in both first and second charge positions across England and Wales. LTV on a second charge is calculated on the combined total debt against the property.

Not always. Residential bridging is primarily asset-based lending — the property value, LTV, and exit strategy carry more weight than income or employment status. For a sale exit, income verification is often not required at all. Where the exit is refinance onto a mortgage, the lender will typically want to understand whether you are likely to qualify for a mortgage at exit — which involves some consideration of income or rental income. Self-employed borrowers, retired borrowers, and those with non-standard income are all considered.

The most common reasons bridging lenders decline residential cases: LTV exceeds the maximum for the property type or condition; the exit strategy is unclear, speculative, or not achievable within the term; the property is in Scotland or Northern Ireland (most bridging lenders only cover England and Wales); a short lease (under 70 years), complex title, or unresolved legal issue; the loan falls below the lender's minimum size; an active IVA or undischarged bankruptcy; or the property is so unusual or remote that comparable evidence cannot support a confident valuation. AF Credit will tell you clearly if a case is outside our appetite — and in many cases, we can suggest how to restructure a case to make it work.

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Residential bridging is one product in a specialist range. If your situation involves refurbishment, no-valuation options, auction, or commercial property, the pages below go into more depth.

Refurbishment bridging Auction bridging No-valuation bridging Desktop valuation bridging Commercial bridging
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