Buying property with a bridging loan
Speed up your property purchase with short-term finance that bridges the gap.
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What is a bridging loan?
A bridging loan is a short-term loan that helps you bridge the gap between buying a new property and selling an existing one, or securing longer-term finance. They're often used when time is short - like buying a house at auction.
The property market doesn't always move at your pace. You might find your dream home before your current one sells, or want to act fast on a deal that won't wait. Traditional mortgages can take weeks to be approved, but bridging finance can be arranged in days, giving you a flexible, fast-moving option when you might otherwise miss out.
When and why you'd use a bridging loan
Bridging loans are most commonly used when speed and flexibility are key. They can be a great option if you're:
- Buying a property before selling your current one
- Buying at auction with full payment due in 28 days
- Buying an "unmortgageable" property (like one without a working kitchen or bathroom)
- Finishing renovations or conversions before applying for a mortgage
Let's say you've found a country cottage you love but haven't yet sold your city flat. A bridging loan can help you buy it quickly, then repay the loan once her flat is sold. Without the loan, you might lose the sale to another buyer.
Bridging finance can be secured against residential, commercial, or mixed-use property. You'll need a clear exit strategy - a solid plan for how and when you'll repay the loan, either by selling a property or refinancing onto a mortgage - and the loan term is typically up to 18 months.
Bridging loan interest rates and costs
Bridging loans are usually interest-only, meaning you only pay off the interest during the loan term.
While that seems convenient for property finance, it does come at a cost. Interest rates are higher than standard mortgages (although they still depend on your situation). There may also be arrangement fees (around 1–2%), valuation fees, and legal costs, and early repayment charges where applicable.
There's also the risk that your exit strategy doesn't go to plan. If your sale falls through or your mortgage application is delayed, you could face extra costs - or even repossession if you don't keep up with repayments.
In other words, bridging loans cost much less when you've got a clear, realistic repayment plan in place and a bit of wiggle room.
Summing up
A bridging loan can be a smart, fast-track option when buying property, especially when time is tight or a traditional mortgage isn't suitable. Just be sure you understand the costs and have a clear exit plan. When used carefully, bridging finance can unlock opportunities that would otherwise pass you by.
As with all secured loans, remember that you risk losing your property if you don't keep up with repayments.
Frequently Asked Questions
How quickly can I get a bridging loan?
Bridging loans can often be arranged much faster than standard mortgages - sometimes in just a few days. The speed depends on your paperwork, property valuation times, and how quickly the various parties can act. You should compare loans and use a bridging loan calculator to make sure you're on the right track, which can save you time on rejected applications.
Should I use a bridging loan broker?
A broker can be helpful, especially if you're struggling to find a high street lender. They can help you find the best bridging loan deals for your situation and the maximum loan available. You'll still need to have your monthly income, credit history, and bridging loan exit strategy ready to show.
What's the difference between open and closed bridging loans?
An open bridging loan doesn't have a fixed repayment date, while a closed bridging loan does. Closed loans are usually cheaper and easier to arrange if you already have a set date for your property sale or mortgage completion. Open loans are usually more flexible but can come with higher costs.
Do I need a deposit for a bridging loan?
Yes, bridging loan lenders typically require a higher deposit than usual - often around 25–30% or more, depending on the loan amount and property type. Some lenders may offer higher loan-to-value options, but you'll usually pay higher interest rates. The more equity or cash you can put in, the better your terms are likely to be.
What's the difference between a first and second charge bridging loan?
A first charge bridging loan is the primary loan secured against a property, giving the lender first claim if the loan isn't repaid. A second charge loan sits behind an existing mortgage and is limited by the equity left on the property.
Can you get an auction bridging loan?
Yes, some bridging loans are specifically for auction property, for when fast completion is needed. Unlike a personal loan, they're secured against the property and can cover a higher loan value. The right bridging loan helps you complete quickly, and you usually pay interest monthly or rolled up at the end of the loan term.
About the author
Lawrence Howlett
Lawrence Howlett brings a results-driven mindset to his writing, shaped by over a decade of experience across finance, legal, and energy sectors. As the founder of Moneysavingadvisors, he’s built a reputation for turning complex financial concepts into clear, actionable insights for consumers. His writing stands out for its clarity, structure, and focus on delivering value.
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