Key Takeaway

A bridging loan is a short-term loan (typically 1 to 12 months) that lets you buy a new UK property before selling your current home, breaking the property chain. These specialist loans are more expensive than standard mortgages, with interest rates often from 0.4% to 1.5% per month, plus arrangement fees of 1.5% to 3%. You must have a clear exit strategy (usually your house sale) and enough equity, as lenders typically lend up to 75% loan-to-value across both properties.

What a Bridging Loan Does

A bridging loan provides temporary finance to “bridge” the gap between buying your next home and selling your current one. According to MoneyHelper, this type of short-term borrowing can help you move quickly when you have found your ideal property but have not yet completed your existing sale (MoneyHelper, 2026).

Regulated bridging loans (secured on your main residence) fall under Financial Conduct Authority oversight, while unregulated loans (for second homes or investment property) do not. As covered in foundational finance texts such as Principles of Finance, short-term lending carries different risk and cost profiles than traditional mortgage products.

Your home may be repossessed if you do not keep up repayments on your mortgage.

Before You Start Checklist

  • Confirm you have substantial equity: most bridging lenders require at least 25% to 30% equity in your current property.
  • Have a firm sale agreed: many lenders want evidence your current home is under offer or already exchanged.
  • Check your exit strategy is realistic: you must prove how and when you will repay the loan (sale proceeds, remortgage, or other funds).
  • Budget for high costs: arrangement fees (1.5% to 3%), monthly interest (often 0.4% to 1.5% per month), valuation fees, legal fees, and broker fees.
  • Understand the loan term: bridging loans typically run for 1 to 12 months, with some lenders offering up to 18 or 24 months.

Assessing Your Finances Checklist

  • Calculate total borrowing: add the purchase price of the new property, minus your deposit, plus all fees and interest for the loan term.
  • Work out combined loan-to-value (LTV): lenders assess LTV across both the property you are buying and the one you are selling; 75% combined LTV is a typical maximum.
  • Verify affordability: can you service monthly interest payments until your current home sells, and still cover your living costs?
  • Plan for delays: if your sale falls through or takes longer than expected, can you extend the loan or find alternative repayment?
  • Check for early repayment charges: some bridging loans charge a fee if you repay early, while others allow penalty-free early exit.

Finding a Lender Checklist

  • Use a specialist broker: bridging finance is a niche market; brokers with access to specialist lenders often secure better rates and terms.
  • Compare regulated vs unregulated: if the loan is secured on your main residence, choose an FCA-authorised lender for regulatory protection.
  • Request a decision in principle: bridging loan approvals can be faster than standard mortgages (sometimes within days), but get written confirmation before committing to a purchase.
  • Review the terms carefully: check interest calculation method (monthly, rolled up, or retained), loan-to-value limits, and required exit proof.
  • Verify all fees upfront: ask for a full breakdown including arrangement fee, valuation, legal costs, administration, and any exit fees.

The Application Process Checklist

  • Provide proof of your exit strategy: typically a signed sale memorandum, mortgage offer for the new property, or evidence of other funds.
  • Submit property valuations: the lender will value both your current home and the property you are buying.
  • Arrange legal representation: you need a solicitor for both the purchase and the bridging loan; some lenders have a panel.
  • Organise buildings insurance: cover must be in place for both properties during the bridging period.
  • Finalise the loan agreement: read all terms, confirm the interest rate, repayment date, and what happens if you cannot repay on time.

Managing Both Properties Checklist

  • Keep your existing mortgage or loan current: continue paying your current mortgage until the sale completes.
  • Service the bridging loan interest: decide whether to pay monthly interest or roll it up (adding it to the loan balance); rolled-up interest increases the final repayment.
  • Monitor your sale progress: stay in close contact with your estate agent and solicitor to avoid delays.
  • Plan for overlap costs: council tax, utilities, insurance, and maintenance on both properties until your sale completes.
  • Communicate with your lender: if the sale is delayed, contact your bridging lender immediately to discuss an extension before the term expires.

Read also: A Guide to Getting Your First Mortgage in the UK

Exit Strategy and Repayment Checklist

  • Confirm sale completion date: as soon as contracts exchange on your current property, you have a legally binding sale date.
  • Arrange final repayment: your solicitor will use sale proceeds to repay the bridging loan on completion day.
  • Check final interest and fees: confirm the exact amount due, including any daily interest up to repayment.
  • Request redemption statement: obtain this from your lender a few days before completion to ensure accurate repayment.
  • Secure your new mortgage: if you are taking a standard mortgage on the new property, ensure it completes at the same time to avoid additional bridging costs.

Common Mistakes to Avoid

  • Underestimating total costs: bridging loans are expensive; failing to budget for rolled-up interest, arrangement fees, and延期 charges can leave you short.
  • Weak exit strategy: lenders reject applications without a clear, credible repayment plan; a vague “I will sell eventually” is not enough.
  • Ignoring the risks: if your sale falls through, you may be forced to sell quickly at a lower price or face repossession proceedings.
  • Using an unregulated loan for your main home: regulated bridging loans offer FCA consumer protections; choose carefully.

Frequently Asked Questions

How long does bridging loan approval take?
Specialist bridging lenders can approve and release funds within one to four weeks, faster than a standard mortgage, but this depends on valuation and legal work.

Can I get a bridging loan if my property has not sold yet?
Some lenders offer “open” bridging loans without a confirmed sale date, but these are harder to obtain, cost more, and require stronger evidence of how you will repay.

What happens if I cannot repay on time?
You may be able to extend the loan (at extra cost), but if you default, the lender can repossess and sell both properties to recover the debt.

Are bridging loans regulated?
Yes, if secured on your main residence. Unregulated bridging loans (for buy-to-let or second homes) do not have the same FCA consumer protections.

Final Advice

Bridging loans offer a practical solution for breaking the property chain, but they carry significant cost and risk. This information is general educational guidance, not regulated mortgage advice or personalised financial or legal advice. Refisage is not authorised by the Financial Conduct Authority. Eligibility, interest rates, fees, and loan terms vary by lender, product, and your individual circumstances. Rates and products change frequently; verify current terms with an FCA-authorised mortgage adviser or specialist bridging broker before deciding. Consider speaking to an FCA-authorised adviser to confirm a bridging loan suits your situation, and ensure you have a robust exit strategy in place before committing.