Bridging Loans

At LoanX, we pride ourselves on securing the best possible bridge loan for your business.

SINCE 2004

What is a Bridging Loan?


A Bridging Loan is a short term funding option used for:

  • Secured property lending

Known also as ‘Bridging Finance’, it is also an established, property-backed method to enable the purchase or refinancing of a property asset when a mortgage is not available or the best option.

Typical applications are:

Fast completion – often used by property developers.

Acquiring at auction – where completion is within 28 days, and traditional financing not an option.

Obtaining an asset at under value

Buying an uninhabitable property to be refurbished – in which lending is based upon the ‘value of a property in its current condition’ and traditional financing is often prohibitive.

Renovating or developing a current property – often used where short-term capital is required for an imminent property refurbishment prior to selling on or refinancing.

Purchasing a property where its ‘title’ will be changed

Acquiring a property where its ‘class of use’ is to be changed during the course of the loan

Obtain planning permission – often used by a developer for immediate access to capital to obtain planning permission and secure development funding.

Extending a Short Lease – enabling the subject property refused a traditional mortgage to be re-mortgageable through traditional lenders.

The ‘Unregulated’ Bridging Loan

A Bridging Loan is defined as ‘Unregulated’ when the property used as security is for business or investment purposes only. This type of Loan Finance is only available when the property will never be occupied by the borrower or any member of their immediate family.
A bridging loan also becomes unregulated when it is taken out under the name of a company/business, instead of a person

Lenders of an unregulated bridging loan will still require:

Security –  typically a 1st or 2nd charge against a property asset owned by the borrower.

Exit strategy  – a clear awareness of the risk that the security asset will be repossessed if the loan is not repaid.

Borrower understanding – with a level of industry knowledge of contracts they are signing and commitments they are making.

Eligibility for Bridging Finance

Qualifying for a Bridging Loan to quickly finance the purchase of a property asset is not reliant on standard criteria applied to regulated lending. Particularly, for the purposes of remortgaging.

Poor credit history is usually not a barrier nor income necessarily an important factor.

Qualification  is focused upon property or land ownership, a realistic method of repaying the loan and sufficient equity.   

Eligibility includes:


UK Ltd Companies

UK Ltd Companies with Poor Credit

Limited Liability Partnerships (LLPs)



Individuals with Equity in their Property

Individuals, either employed or self employed

Individuals who cannot prove their income

Individuals with almost any credit status, good or bad

Individuals with Poor Credit 

How do Bridging Loans work?

A Bridging Loan allows:

  • Finance to be raised against all types of residential and commercial property assets
  • Funding for land with full planning consent

Commercial Bridging Loans for Property Investors

Facility used by property investors for:

  • Fast completion of an asset acquisition that may be the deciding factor in the procurement process.
  • Multiple strategies when buying, refurbishing or repositioning commercial assets.

Bridging finance will always be a much quicker route than an application through a normal commercial mortgage lender.

Bridging finance is entirely based upon the “property asset” value as opposed to revenue that the business generates.

First and Second Charge Loans

A ‘first charge’ is the primary mortgage or loan which takes precedence over all other finance secured against the property.

A ‘second charge’ loan could be secured against the property if there is sufficient equity.

Difference Between a Bridging Loan and Development Finance

Bridging Loans are used to buy the property and sometimes, to refurbish, redevelop, change the title or planning.

Development finance is obtained to carry out a major renovation with structural work, or build from the ground up.

How much does Bridging Finance cost?

Bridging Loan costs mainly comprise interest charges and arrangement fees.

Most favourable rates typically start from 0.44% per month but can reach 1.5% per month.

Other charges that may be applied include, an asset management fee, exit fee, legal fee, and a valuation fee.

Our online Bridging Loan Calculator is a quick and easy guide to providing potential best options based upon analysis of your circumstances.

To calculate the monthly interest and total repayable interest on the loan, simply enter:

  • Loan amount
  • Monthly interest rate
  • Term (in months)

Our bridging loan calculator is for reference use only and does not include broker fees.

How Bridging Finance can be used in property purchasing

There are a number of Bridging Loan uses:

  • Expedite rapid refinancing
  • Provide finance while waiting for another action to finalise
  • When conventional credit is refused
  • Acquiring a property at auction
  • Obtaining an otherwise un-mortgageable property
  • Buying a property prior to the sale of an existing property
  • Buying an undervalued from an LPA Receiver
  • Borrowing against value, not purchase price
  • Fund a property refurbishment project
  • Finance property or land during an application for planning permission

Key Advantages of a Bridging Loan

Bridging Finance is an invaluable asset procurement tool providing:

Quick Completion: Loan applications usually complete in up to 21 days or, in particular cases, on the day of submission, with funds available within 48 hours.

Flexible Repayments: Early repayments can be made without penalty.

No Monthly Payments: Applied to interest rolled up or deducted, allowing unhindered cashflow during a refurbishment or promotional period.

Lending Against Un-Mortgageable Properties: Normally not possible by any other method.

Exit Route Issues: A problem with the chosen repayment method can cause major issues as the end of the loan period approaches. Inability to repay the loan at the end of the term requires refinancing or servicing of the loan. The procedures may not be acceptable to the lender and consequently, property and credit profile would then be at serious risk.

Bridging Loans Lenders Checks


Each Lender carries out their own prior checks and will often view a Bridging Finance application differently before agreeing to proceed.

Key areas covered:

Asset Type and Strength  – including, whether the asset can be sold easily if there are problems.

Exit Strategy – evidence supported method of loan repayment.

Loan To Value (LTV) – central to the lender’s decision making process, and affecting the interest rate.

Legal Due Diligence – lender’s own independent solicitor checks including, loan documents are all completed correctly prior to release of funds.

ID and “Know Their Client” (KYC ) Checks  – formal identification process including, passport, driving license, utility bills, bank statements.

Potential Hidden Fees

Additional Fees: Some lenders will add in additional fees, which often presents a challenge in making a cost comparison between two lenders. The total cost of borrowing should always be factored in rather than only considering the facility fee and interest rates.

Default Interest Rate: A loan not repaid on time is considered to be in default and should this occur, most lenders will charge a responsible and fair interest rate. It is important to check and compare default interest rates when comparing different loan offers. They could be as high as 2-3% per month, and charged from the start of the loan.

Bridging Loan Interest Rates

Rates start at 0.44% per month and in the majority of cases, are usually below 1% per month.

Interest payments are usually retained or deducted at the outset, and repaid with the loan at the end of the loan period, or before, if an early exit strategy is completed.

100% Bridging Loans

Typical loans for residential property are 75% of the value, and 65% for commercial property, depending on the property, location and borrower profile. Higher amounts are available in certain circumstances.

100% bridging loans provides short-term finance against a property with no cash deposit used towards the purchase.

There are two main types of funding:

  • Use of another property or asset as extra security for the loan, assuming sufficient equity.
  • Buying below the open market value (OMV).

A 100% Bridging Loan is usually 70 – 75% of the open market value of a property. It’s important to note that ability to borrow 100% of the open market value is dependent upon another asset used as extra security, such as an investment property.

Comparing Bridging Loans

The increasing number of new bridging finance lenders entering the market can present a challenge to obtaining the optimum loan facility when comparing pricing and fees.
Our online Bridging Loan Calculator is a quick and easy guide to providing potential best options based upon analysis of your circumstances.
Simply enter the amounts expected to be borrowed and simulate repayment amounts based on an interest rate and loan term.
Only the loan interest is calculated and not any additional fees / charges that may be added to a loan arrangement including, any rolled up interest or an exit fee.