Bridging Finance: What It Is and When to Use It
Bridging finance provides short-term funding — typically between one month and 24 months — to bridge a gap between a financial need and a longer-term solution. It is fast, flexible, and more expensive than a standard mortgage, so it is important to use it in the right circumstances.
Common Uses for Bridging Finance
Bridging loans are used to purchase a property before selling an existing one, buy at auction (where completion is required within 28 days), fund refurbishment before refinancing onto a buy to let mortgage, or acquire unmortgageable properties that need work before a standard lender will consider them.
Open vs Closed Bridges
A closed bridge has a fixed repayment date — typically used when contracts have been exchanged on a sale. An open bridge has no fixed end date, though lenders will still want a clear exit strategy. Rates are usually slightly higher on open bridges to reflect the additional risk.
Costs to Consider
Bridging interest is typically charged monthly (0.4–1.5% per month) rather than annually. Arrangement fees, exit fees, legal costs, and valuation fees all add up. Your broker will provide a full cost illustration so you can assess whether the deal makes financial sense.
The Exit Strategy
Every bridging loan needs a credible exit strategy — how you will repay the loan at the end of the term. Common exits include selling the property, refinancing onto a buy to let mortgage, or completing a development and selling. Lenders scrutinise this carefully, and a weak exit strategy is the most common reason applications are declined.
Need fast, flexible finance? Our bridging specialists will find the right solution and guide you through the process from application to completion.