What a bridging loan is and why banks make them
A bridging loan is a short-term loan that covers a gap between two events — usually between buying a new home and selling an old one. The bank lends you money now, expecting you to repay it in a few months when the sale completes or another source of funds arrives. It is not a permanent loan product like a mortgage; it is meant to last weeks or months, not years.
Banks offer bridging loans because they are profitable and relatively low-risk. You are typically using the money to buy property that will serve as collateral, or you are waiting for a sale that will repay the loan. The bank holds security against the property involved, so they have a way to recover their money if you cannot repay.
The catch is that bridging loans are expensive. Interest rates are higher than mortgages, and you usually pay fees upfront. You also need to may have access to based on the value of the property you are buying or selling, not just your income — which is why someone with a lower salary but significant property equity can sometimes access a bridging loan when a traditional personal loan would be refused.
Key Takeaways
- Bridging loans are short-term loans designed to cover the gap between buying one property and selling another, typically lasting three to twelve months.
- Interest rates and fees are significantly higher than mortgages because the loan is unsecured by a completed sale and carries more risk for the lender.
- Most high street banks and specialist bridging lenders offer these products, but availability and terms vary widely depending on the property value and your circumstances.
- You will need a surveyed property value, proof of the sale or purchase in progress, and usually a clear exit strategy showing how you will repay within the loan term.
- Bridging loans are not suitable for everyday banking needs — they are a specialist product for property transactions where timing does not align.
Which banks and lenders offer bridging loans
Most major high street banks — including Barclays, HSBC, Lloyds, and NatWest — offer bridging loans, though not all branches handle them. You typically need to speak to a mortgage adviser or specialist lending team rather than walking into a branch and asking. Some banks have minimum loan amounts (often £50,000 or higher) and may only lend on properties above a certain value.
Specialist bridging lenders exist alongside the banks. These are companies that do nothing but bridging loans and often move faster than banks because they have fewer approval layers. Names include Bridging Finance, Precise Mortgages, and Connells Bridging, though the market includes dozens of smaller firms. Specialist lenders may be more flexible on property type or your personal circumstances, but they typically charge higher interest rates than banks.
Mortgage brokers can search across multiple lenders at once, which saves you making individual enquiries. A broker can tell you in one conversation which lenders will consider your situation and what rates they are quoting. Some brokers specialise in bridging and have relationships with lenders banks do not advertise to the public.
How much a bridging loan costs
Interest on a bridging loan typically ranges from 0.5% to 2% per month, depending on the lender, the loan amount, how long you need it, and the security offered. That sounds like a small percentage until you calculate it annually — 0.5% per month is 6% per year, and 2% per month is 24% per year. For comparison, a standard mortgage might be 4% to 6% annually.
You also pay upfront fees. An arrangement fee (the cost of setting up the loan) might be 1% to 3% of the loan amount. A valuation fee covers the surveyor who assesses the property. Legal fees cover the solicitor who handles the paperwork. These can add £2,000 to £5,000 or more depending on the loan size.
Some lenders offer "rolled-up interest," meaning you do not pay interest monthly — instead, it is added to the loan balance and repaid when you repay the capital. This reduces your monthly cash outflow but means you owe more at the end. Other lenders require monthly interest payments. Ask which structure applies before you commit.
How long you can borrow for and what happens if you miss the important date
Most bridging loans run for three to twelve months. Some lenders will extend to eighteen months or longer, but this is less common and usually costs more. The loan term is set when you borrow, and you agree to repay by a specific date — usually the date your property sale is expected to complete.
If your sale falls through or completes later than expected, you have a problem. You cannot straightforward keep the bridging loan running indefinitely. Most lenders will allow a short extension (a few weeks) but charge a penalty or higher interest rate. If you cannot repay within the extended period, the lender can force a sale of the property used as security, which means losing the home you were trying to buy or selling your current home on their timeline, not yours.
This is why lenders ask for an "exit strategy" before they lend. You need to show them how you will repay — usually by the sale of your current property completing, or by refinancing into a standard mortgage once the purchase completes. If your exit strategy fails, you are in a difficult position.
What you need to provide when you explore
Lenders will ask for proof that you are actually buying or selling property. This means a signed contract or an offer that has been accepted, not just an idea that you might buy something. They need to see the purchase price and the expected completion date.
You will need a recent property valuation or survey for any property used as security. If you are buying, the lender will arrange a valuation. If you are using your current home as security, you will need to pay for a valuation yourself (usually £200 to £500).
Proof of funds is important. If you are bridging to buy a second property while selling the first, lenders want to see that you have a deposit saved or that the sale is genuinely in progress. Bank statements covering the last few months are standard. If you are self-employed, you may need accounts or tax returns.
You will also need identification, proof of address, and details of any existing mortgages or debts. Some lenders ask for a personal credit report, though bridging decisions are based more on property value than credit score.
Bridging loans versus other ways to cover the gap
If you are selling one home to buy another, a bridging loan is not your only option. Some people take out a personal loan or use a credit card to cover the gap, though this only works for small amounts and is expensive. Others negotiate with the seller to delay completion until their sale finishes, or ask their current lender for a short-term increase to their mortgage.
A few buyers ask the seller to take back a loan — meaning the seller finances part of the purchase price and you repay them once your sale completes. This is less common in the UK but does happen, especially in slower markets. It avoids bank fees but requires trust between buyer and seller.
If you have savings, using those to cover the gap avoids interest and fees entirely. The trade-off is that your money is tied up and you lose any interest it would have earned. For most people, a bridging loan is faster and less disruptive than waiting for a sale to complete before buying, even though it costs more.
Red flags and things that can go wrong
The biggest risk is that your exit strategy fails. If your property does not sell on time, you cannot repay the bridging loan. This can lead to the lender forcing a sale or taking legal action. Before you borrow, be realistic about how long your sale will actually take — do not assume a quick sale if the market is slow or your property is unusual.
Some people borrow more than they can afford to repay if the sale is delayed. A bridging loan is meant to last months, not years. If you are counting on a sale to repay and the sale takes longer than expected, you will struggle with monthly interest payments. Calculate what you can afford if the loan runs for longer than planned.
Beware of lenders who promise to lend without a clear exit strategy or who do not ask questions about how you will repay. Legitimate lenders are cautious because they have money at risk. A lender who is too eager may be taking on risk they do not understand, which can lead to problems later.
Frequently Asked Questions
Can I get a bridging loan if I am still paying off a mortgage on my current home?
Yes. Most lenders will lend against the equity in your current home — the difference between what it is worth and what you still owe. If your home is worth £300,000 and you owe £200,000, you have £100,000 in equity that can be used as security. The lender will take a second charge against the property, meaning they are second in line if the home is sold.
What happens to the bridging loan when my property sale completes?
The sale proceeds go to your solicitor, who uses them to repay the bridging loan in full. The lender releases their security (the charge against your property) once they are repaid. This happens automatically as part of the completion process — you do not need to do anything except make sure your solicitor knows the loan exists.
Can I use a bridging loan to buy a property that is not a house?
Most banks will lend on residential property — houses and flats. Some will lend on commercial property or land, but terms are stricter and interest rates higher. A few specialist lenders focus on unusual property types. Ask the lender upfront whether they will lend on the specific property you are buying.
How quickly can I get a bridging loan?
Specialist bridging lenders can sometimes complete in two to four weeks. Banks typically take four to eight weeks because they have more approval stages. Speed depends on how quickly you provide documents and how straightforward your situation is. If you need money urgently, a specialist lender is faster, but you will pay more for the speed.
What if I cannot repay the bridging loan on time?
Contact your lender when ready — do not wait until the important date passes. Most lenders will discuss an extension if you have a genuine reason for the delay and a clear new repayment date. Extensions cost more (higher interest or a fee), but they are better than defaulting. If you cannot repay and cannot extend, the lender can force a sale of the property used as security.