What is a Bridging Loan?
A bridging loan is a short-term loan secured against property. It is designed to bridge a gap in funding, usually for a period between a few months and up to twelve months. These loans are commonly used in property transactions where speed is critical.
Bridging loans are regulated or unregulated depending on the borrower’s circumstances. Regulated bridging loans are used when the security is, or will be, the borrower’s main residence.
For a broader overview of short-term finance options, visit our dedicated Bridging Loan service page.
How Bridging Loans Work
Bridging finance is typically secured as a first or second charge against property. Interest can be paid monthly, rolled up, or deducted in advance. The loan is repaid upon completion of the exit strategy, such as by selling a property or refinancing into a longer-term mortgage.
Many borrowers move from bridging finance to a standard residential mortgage or a buy-to-let mortgage once the transaction stabilises.
When Bridging Loans are Used
Bridging loans are often used in the following situations:
- Buying a property before selling an existing one
- Purchasing at auction with short completion deadlines
- Funding refurbishment or light development works
- Resolving chain breaks
- Releasing capital quickly against property
In refurbishment or investment scenarios, bridging finance is often paired with longer-term buy-to-let solutions once works are complete.
Types of Bridging Loans
There are several types of bridging finance available:
- Open bridging loans with no fixed repayment date
- Closed bridging loans with a confirmed exit date
- First charge bridging loans
- Second charge bridging loans
Second charge options may be suitable where an existing mortgage remains in place. You can read more about this on our Second Charge Mortgages page.
Risks and Considerations
Bridging loans are short-term and typically carry higher interest rates than standard mortgages. They require a clear and realistic exit strategy. If the loan is not repaid on time, additional costs may apply.
Your home may be repossessed if you do not keep up repayments on a mortgage or any loan secured on it.
This is why professional advice is essential before proceeding with bridging finance.
Why use Connect Mortgages
Connect Mortgages works with a wide panel of specialist lenders to source appropriate bridging finance based on your circumstances. We assess affordability, exit strategies, and risk before making any recommendation.
Connect Mortgages is part of the Connect Group. Connect Experts and Connect for intermediaries are trading divisions of Connect IFA Ltd. This wider structure strengthens lender access, compliance oversight, and adviser expertise.
Mortgage advisers looking to expand their specialist lending capability can Join Our Mortgage Network. Clients seeking regulated advice can Find Mortgage Advisers through the Connect Experts platform.
Thank you for reading our “About Bridging Loans | Short Term Property Finance” publication. Stay “Connect“-ed for more updates soon!
