What Is a Bridging Loan and When Does One Make Sense?
A bridging loan is a short-term loan secured against property. It bridges the gap between two events. Terms are usually 3–24 months. Regulated residential bridges are currently capped at 12 months. People most often use one to buy a new home before the old one sells. They also use one to buy a property before long-term finance is ready. This money is expensive. But it is fast. Funds can arrive in days.
At a glance
- Cost:
- Interest ~0.5–1.5% per month, plus arrangement (~1–2%), valuation, legal, and exit fees
- Total time:
- Days to arrange; terms run 1–24 months
- Steps:
- 6 steps
- Where to apply:
- fca.org.uk
Last reviewed October 2026 against official sources. Re-checked annually · next review due October 2027.
The Steps
Follow these in order
Each card shows the phase, expected time, and any cost. Data checked against official UK sources(October 2026).
0 of 6 steps
- Before You Go 20 min
Understand how it works
The loan is secured against property. It can be a first charge or a second charge. The property may be the one you are buying. Or it may be one you already own. Interest is usually charged each month, at 0.5–1.5% per month. Or it can be added up and paid at the end. Terms run 3–24 months. But regulated residential bridges on your own home are currently limited to 12 months. The loan is backed by the property. So lenders focus on your equity and your exit plan. They do less deep checks on your income. That is why they can decide so fast.
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- Before You Go 15 min
Know the two good reasons to use one
Chain-break bridging: you buy your next home before your current sale completes. This is the classic home use. The FCA regulates it when your own home is involved. Development and auction bridging: you need money to buy in the 28-day auction window. Or you need money to do up a property. You then refinance onto a normal mortgage or sell it. Do not use a bridge for other things. Do not use it to clear debts. Do not use it to plug a general cash gap. The costs make it a trap for those uses.
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- Before You Go 30 min
Write your exit plan — the lender will demand it
Every bridging loan decision turns on your exit plan. This is how the loan gets repaid. It may be a sale completing. Or it may be a remortgage that repays the bridge. An exit plan is strong when you have proof. For example, your property is under offer. Or you have a mortgage agreed in principle that covers the new amount. Is your exit just a hope that the market improves? Then the lender will say no. Or they should. If an exit fails, the loan rolls into an extension. That costs extra each month.
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- Go 1–2 days
Use a specialist broker and compare total cost
Bridging is a broker market. Specialists know which lenders accept which exit plans. They also know what each lender charges. Compare all the costs. Look at the monthly interest rate. Look at the arrangement fee, which is 1–2% of the loan. Look at the valuation and legal costs. You often pay the lender's solicitor costs too. Look at exit fees and charges for extending the loan. A rate of 0.69% a month with high fees can cost more over six months than 0.95% with low fees. Work out the cost for the full term.
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- Submit & Pay 1–2 weeks
Complete quickly — that is the point
On a simple deal, the valuation, legal work, and funds can move within 5–10 working days. First-charge bridges on property with no other loan are the fastest. Second charges behind a current mortgage take longer. Interest starts when you draw the money. So time the completion as tightly as you can. Every idle week costs you money.
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- Follow Up ongoing
Execute the exit and retire the loan
Finish your exit plan on time. Complete the sale or the refinance. Then pay off the loan. If the exit slips, tell the lender at once. An agreed extension costs far less than falling into default terms. On regulated residential bridges, the FCA's rules give you real protection. Never quietly roll one bridge into another bridge. Short-term debt that keeps building up against a home turns a fixable problem into repossession.
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Be Careful
Don't make these mistakes
Taking a bridge with no firm exit plan. Every bridging loan decision turns on your exit plan, which is how the loan gets repaid, such as a sale completing or a remortgage that repays the bridge. An exit that is just a hope that the market improves is not a plan. If an exit fails, the loan rolls into an extension that costs extra each month.
Comparing only the monthly interest rate. A rate of 0.69% a month with high fees can cost more over six months than 0.95% with low fees. Compare all the costs: the monthly rate, the arrangement fee of 1 to 2% of the loan, valuation and legal costs, exit fees, and charges for extending the loan, and work out the cost for the full term.
Using a bridge to clear debts or plug a cash gap. Do not use a bridge to clear debts or to plug a general cash gap, because the costs make it a trap for those uses. The good reasons are chain-break bridging, where you buy before your current sale completes, and development or auction bridging, where you need money within the 28-day auction window or to do up a property.
Quietly rolling one bridge into another. If the exit slips, tell the lender at once, because an agreed extension costs far less than falling into default terms. Never quietly roll one bridge into another bridge. Short-term debt that keeps building up against a home turns a fixable problem into repossession.
Letting borrowed money sit idle. Interest starts when you draw the money, so time the completion as tightly as you can. Every idle week costs you money, and on a simple deal the valuation, legal work, and funds can move within 5 to 10 working days.
FAQ
Frequently Asked Questions
When does a bridging loan actually make sense?
It makes sense when there is a short gap with clear proof. And a long-term fix is close. For example, your property chain has broken but your home is under offer. Or you must complete an auction purchase in 28 days. Or you are doing up a property so you can remortgage it. In each case, you can see the exit. The interest for a few months is small next to the value of the deal. With no firm exit, bridging does not make sense at any rate.
How much does a bridging loan cost?
Budget for about these costs. Interest is 0.5–1.5% per month. You can pay it each month or add it to the loan. The arrangement fee is 1–2% of the loan. Valuation is ~£500–£1,500, and you pay legal fees for both sides. There may also be an exit fee of about 1%. In total, a £200,000 bridge held for six months often costs £8,000–£15,000. The term is the key thing. Every extra month is a month of high-rate interest.
Are bridging loans regulated?
Only in part. If the loan is secured on your own home, it is regulated by the FCA. The same applies if you or your family will live in the property. You get advised sales and checks on what you can afford. This is called regulated bridging. Loans on investment property are not regulated. Auction buys and development loans are not regulated either. So you and your solicitor must check the terms in full. Ask any broker this question directly: "Is this a regulated or unregulated bridge?"
What are the alternatives to bridging?
For a chain move, never choose sale-and-rent-back. Try other options first. You could agree different completion dates. You could add a delayed completion clause. Or you could use a portable mortgage. Some main lenders offer "bridge-to-let" products for buyers. These cost less than classic bridges. For auction buys and home repairs, look at special refurbishment mortgages. Development finance can also spread costs over a longer term. Sometimes the right answer is not to stretch at all. Losing a deal costs less than a failed bridge.
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