Bridging LoanCalculator
Calculate bridging loan costs instantly. Get accurate estimates for monthly interest, arrangement fees, and total costs for auction purchases, chain breaks, and property refurbishments.
Unlock Your Results
Enter your details to see your personalised calculation
Your Bridging Loan Summary
Interest is typically rolled up and paid at the end of the term. Additional costs may include valuation, legal fees, and exit fees.
The Complete Guide to Bridging Finance in the UK
Bridging finance is a specialist form of short-term secured lending designed to "bridge" the gap between a property purchase and securing permanent financing. As a flexible financial instrument, bridging loans have become essential for property investors, developers, and businesses requiring rapid access to capital. The UK bridging finance market has grown significantly, with lenders advancing billions annually to borrowers who need speed and flexibility that traditional mortgage lenders cannot provide.
Unlike conventional mortgages that can take 8-12 weeks to arrange, bridging loans can complete in as little as 7-14 days, making them ideal for time-sensitive transactions. This speed comes from streamlined underwriting processes and the focus on asset value and exit strategy rather than extensive income verification. Bridging finance providers assess applications based on the security property's value and the borrower's credible plan to repay the loan, whether through sale, refinance, or other means.
Key Bridging Loan Statistics (2024-2025)
- • Average bridging loan term: 9-12 months
- • Typical monthly interest rates: 0.55% - 1.25%
- • Maximum LTV available: Up to 80% (75% typical)
- • Minimum loan amounts: From £25,000
- • Average time to completion: 2-4 weeks
How Do Bridging Loans Work?
A bridging loan is secured against property—either the asset being purchased or existing property owned by the borrower. The lending decision primarily focuses on two factors: the loan-to-value ratio (LTV) of the security and the viability of the exit strategy. Interest on bridging finance is typically "rolled up" or retained, meaning monthly payments aren't required during the loan term; instead, interest accrues and is paid when the loan is repaid.
1First Charge Bridging
A first charge bridge is secured as the primary lender against the property, with no other mortgage or loan ranking ahead. First charge bridging typically offers the most competitive rates, ranging from 0.55% to 0.95% per month.
- ✓ Lower interest rates
- ✓ Higher LTV available (up to 80%)
- ✓ Faster processing times
- ✓ More lender options
2Second Charge Bridging
A second charge bridge sits behind an existing first charge mortgage. This structure allows borrowers to release equity without disturbing favourable existing mortgage rates. Second charge rates typically range from 0.85% to 1.5% monthly.
- ✓ Preserve existing mortgage
- ✓ Access additional equity
- ✓ No early repayment charges on first
- ✓ Ideal for portfolio expansion
Understanding Rolled-Up Interest
Most bridging loans operate on a rolled-up or retained interest basis. Rather than making monthly interest payments, the interest is added to the loan balance and paid at redemption. This structure provides significant cash flow advantages—you don't need to service the debt monthly, which is particularly beneficial during refurbishment projects when the property isn't generating income. However, it's essential to understand that rolled-up interest compounds, so the total cost increases the longer the loan runs.
Example: Rolled-Up Interest Calculation
£500,000 loan at 0.85% monthly for 12 months = £51,000 total interest (approximately £425/day). Redeeming at month 6 instead of month 12 saves approximately £25,500 in interest charges.
When to Use Bridging Finance
Bridging loans serve various scenarios where speed, flexibility, or unconventional circumstances make traditional lending unsuitable. Understanding the appropriate use cases ensures you're using bridging finance strategically rather than as an expensive alternative to conventional borrowing.
Auction Purchases
Property auctions require completion within 28 days—too fast for traditional mortgages. Bridging lenders specialise in auction finance, often providing terms within 24 hours of the hammer falling.
Chain Break Finance
Break a property chain by purchasing your new home before selling your existing one. The bridge is repaid when your current property sells, removing the risk of losing your purchase.
Refurbishment Projects
Purchase and renovate properties that are unmortgageable in their current condition. Light refurb bridges typically allow 6-12 months for works before refinancing onto a standard mortgage.
Unmortgageable Properties
Properties without kitchens, bathrooms, or with structural issues often can't secure traditional mortgages. Bridging lenders focus on end value potential rather than current condition.
Business Opportunities
Time-sensitive commercial opportunities—stock purchases, business acquisitions, or urgent capital requirements—can be funded against property security.
Downsizing Finance
Purchase a smaller property before selling your larger home, avoiding rental limbo and securing your preferred property without chain pressure.
Understanding Bridging Loan Costs
Bridging finance costs more than traditional mortgages, but the premium pays for speed, flexibility, and access to funding that wouldn't otherwise be available. Understanding the full cost structure helps you budget accurately and compare different offers effectively.
| Cost Component | Typical Range | Notes |
|---|---|---|
| Monthly Interest Rate | 0.55% - 1.25% | Rate depends on LTV, property type, exit strategy |
| Arrangement Fee | 1% - 2% | Usually added to loan, paid at redemption |
| Exit Fee | 0% - 1% | Some lenders charge, many don't |
| Valuation Fee | £300 - £1,500+ | Depends on property value and complexity |
| Legal Fees (Lender) | £800 - £2,000+ | Borrower pays lender's legal costs |
| Broker Fee | 0.5% - 1% | If using a broker; often worth the savings achieved |
Exit Strategies for Bridging Loans
The exit strategy is arguably the most critical element of any bridging loan application. Lenders need confidence that you have a viable, realistic plan to repay the loan. A weak or unclear exit strategy is the most common reason for bridging applications being declined or offered at higher rates.
Sale Exit
Selling the security property or another asset to repay the bridge. Lenders will assess market conditions, comparable sales evidence, and realistic marketing timelines.
- • Provide comparable sales evidence
- • Allow realistic marketing periods
- • Consider chain-free buyers
Refinance Exit
Refinancing onto a term mortgage—residential, buy-to-let, or commercial. Lenders want evidence you'll qualify for the refinance based on income, property type, and condition post-works.
- • Demonstrate mortgage eligibility
- • Property must be mortgageable at exit
- • Consider AIP from refinance lender
Development Exit
For development projects, exit through sale of completed units or refinance onto investment terms. Development exit bridges specifically cater to projects nearing completion.
- • Lower rates than development finance
- • Works must be substantially complete
- • Exit via sales or term refinance
Capital Raise Exit
Repaying from incoming funds—inheritance, investment maturity, business sale, or other capital events. Requires clear evidence of funds and timing.
- • Documentary evidence required
- • Solicitor confirmation helpful
- • Timing must align with loan term
Frequently Asked Questions About Bridging Loans
How quickly can I get a bridging loan?
Bridging loans can complete in as little as 7-14 days for straightforward cases with clear title and standard security. Complex cases involving multiple securities, leasehold issues, or unusual property types may take 3-4 weeks. The key factors affecting speed are the lender's capacity, valuation turnaround, and solicitor efficiency. For urgent cases, some lenders offer expedited services with desktop valuations for an additional fee.
What credit score do I need for bridging finance?
Bridging lenders are generally more flexible on credit history than traditional mortgage lenders. While a clean credit file will access the best rates, many lenders work with borrowers who have adverse credit, CCJs, defaults, or even recent bankruptcies. The security value and exit strategy carry more weight than credit score. Expect higher rates (typically 0.2-0.5% more monthly) if you have credit issues. Some specialist lenders specifically target the adverse credit bridging market.
Can I get a bridging loan on an unmortgageable property?
Yes, bridging lenders regularly fund properties that traditional mortgage lenders won't touch. This includes properties without kitchens or bathrooms, those with structural issues, short leases, non-standard construction, or those requiring significant renovation. The lender will value the property in its current condition and lend based on that value. Your exit strategy should demonstrate how you'll make the property mortgageable. Light refurbishment bridges are specifically designed for these scenarios.
What's the difference between regulated and unregulated bridging?
Regulated bridging loans are secured against a property that you or a family member will live in. They fall under FCA regulation and offer consumer protections. Unregulated bridging is for investment properties, commercial properties, or land—essentially anything that won't be your home. Unregulated loans typically complete faster as they have fewer regulatory requirements. Most bridging activity is unregulated, used by investors and developers rather than homeowners.
Can I extend my bridging loan if I need more time?
Most bridging lenders will consider extensions if you need additional time to complete your exit strategy. Extensions typically cost 1-2% of the loan amount as an extension fee, plus continued interest. It's crucial to communicate early if you foresee needing an extension—lenders are far more accommodating when given advance notice rather than last-minute requests. Some lenders build extension options into their initial terms, providing greater certainty.
Do bridging loans have early repayment charges?
Most bridging lenders don't charge early repayment penalties—you typically pay interest only for the period you use the funds. However, some lenders have minimum interest periods (e.g., 3 months minimum interest regardless of when you repay). Always check the minimum interest terms and exit fee structure before committing. The flexibility to repay early without penalty is one of the key advantages of bridging finance over fixed-term loans.
Who Uses Bridging Finance?
Property Developers
Funding acquisitions, refurbishments, and development exits across residential and commercial projects.
Property Investors
Portfolio expansion, auction purchases, and opportunistic acquisitions requiring speed and flexibility.
Homeowners
Chain breaks, downsizing, and securing new properties before existing homes sell.
Business Owners
Working capital, stock purchase, business acquisitions, and time-sensitive commercial opportunities.
Related Property Finance Calculators
Explore our other calculators to model different financing scenarios for your property projects.
Why Choose CMB for Your Bridging Finance?
Commercial Mortgages Broker is a trading style of CMB Finance Ltd. We are a provider of non-regulated lending solutions. Your property may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.