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What is bridging finance? How bridging loans work, costs and when to use one
Bridging finance is a short-term loan secured on property, used to cover a gap until money arrives from somewhere else, usually the sale of a property or a longer-term mortgage. It is quick to arrange and flexible, but it costs more than a normal mortgage and only works if you have a clear, realistic way to repay it.
Updated 17 September 2026 with the latest bridging market figures and a worked cost example.
Typical term
12 months
The average term in Bridging Trends data for Q2 2026. Loans often run for a few months up to around two years
Most common use
Chain breaks
18% of loans in Q2 2026, level with investment purchases. Auction purchases were 14%
Average loan to value
55%
Average in Q2 2026. Maximums vary by lender and property type
Average completion
46 days
From application to funds in Q2 2026. Simple cases can be quicker
What is bridging finance?
A bridging loan "bridges" the time between needing money and getting it. You borrow against property, usually for months rather than years, and repay the whole loan in one go at the end.
That final repayment is called the exit. It is normally the sale of a property, a new mortgage once a property is mortgageable, or another lump sum you are sure will arrive.
The terms bridging finance, bridge finance, bridging loans and bridging mortgages all describe the same kind of borrowing.
How a bridge fits between buying and selling
The classic example is a chain break. You have found your next home, but the buyer for your current home has pulled out. A bridge lets you complete the purchase now and repay the loan when your old home sells.
How a chain-break bridging loan works
The bridge runs from buying your new home until the sale of your old one repays it
How does bridging finance work? Step by step
- Plan the exit firstKnow how you will repay and how long it could realistically take.
- Get terms from a lenderA broker compares lenders and gets indicative terms: loan size, monthly rate, fees, term and how interest will be paid.
- Valuation and underwritingThe lender values the security property and checks the exit. For regulated bridges it also checks affordability and suitability.
- Legal workYour solicitor and usually the lender's solicitor deal with title, searches and the charge over the property.
- Funds releasedThe money goes to your solicitor for completion. Interest starts from this day.
- Exit and repayWhen the sale or refinance completes, the loan, any rolled-up interest and exit fees are repaid in one payment.
Regulated vs unregulated bridging loans
Some bridging loans are regulated by the Financial Conduct Authority (FCA) and some are not. The difference is who lives, or will live, in the property.
| Regulated bridge | Unregulated bridge | |
|---|---|---|
| When it applies | Secured on a home that you or a close family member live in, or will live in (at least 40% of the property used as a dwelling) | Investment, buy-to-let, commercial and business borrowing, where no borrower or close relative will live in it |
| Typical uses | Chain breaks, downsizing, buying a home before selling | Auction purchases, refurbishing to let or sell, development, business cash flow |
| Checks | FCA mortgage rules on advice, affordability and fair treatment | Set by the lender, focused on the property and exit |
| Complaints | Usually access to the Financial Ombudsman Service | Fewer consumer protections, and Ombudsman access depends on the lender and the loan |
In Q2 2026, 48% of bridging loans in the Bridging Trends figures were regulated, the highest quarterly jump since 2022. Close family here means a spouse, civil partner or partner you live with, or a parent, brother, sister, child, grandparent or grandchild.
Unregulated bridging loans are not regulated by the Financial Conduct Authority. Whether a loan is regulated will depend on your circumstances and the purpose of the loan.
Open vs closed bridging loans
Closed bridge
A fixed repayment date
You already have a confirmed exit, such as exchanged contracts on your sale. Lenders see these as lower risk, and they can be easier to arrange.
Open bridge
No fixed repayment date
You have a clear plan but no set date, such as a home that is on the market but not yet sold. The loan still has a maximum term, and lenders look harder at how realistic the exit is.
First charge vs second charge
A first charge bridge is the main loan secured on a property, either because it has no mortgage or because the bridge repays the existing one. A second charge bridge sits behind an existing mortgage, so you keep that mortgage in place. Your existing lender may need to give consent, and second charge loans can cost more because the lender is repaid second if the property is sold. Second charge loans made up 22% of Q2 2026 bridging in the Bridging Trends data.
What is bridging finance used for?
In Q2 2026, preventing a chain break and buying an investment property were the joint most common uses, each 18% of loans, followed by auction purchases at 14%.
Chain breaks and downsizing
Usually regulated
Buy your next home before your current one sells, then repay from the sale. Popular with downsizers who have plenty of equity.
Auction purchases
Speed matters
Auction buyers often have a fixed period, commonly around four weeks, to complete. A bridge can be quicker than a mortgage, especially if you start before bidding.
Unmortgageable property
Fix it, then refinance
A home with no working kitchen or bathroom, or in poor repair, may not qualify for a mortgage. A bridge funds the purchase and works, then a mortgage repays it.
Development and refurbishment
Usually unregulated
Light or heavy refurbishment, conversions and small projects, repaid by sale or a buy-to-let mortgage. Larger ground-up schemes normally use development finance instead.
Investors and businesses
Usually unregulated
Below-market-value purchases, fast equity release or a short-term business cash injection.
How much does bridging finance cost?
Bridging interest is quoted as a monthly rate. There are three ways to deal with it:
| Interest option | How it works | Good to know |
|---|---|---|
| Retained | Interest for an agreed period is deducted from the loan at the start | No monthly payments, but you receive less cash. Unused interest may be refunded if you repay early |
| Rolled up | Interest is added to the balance each month and repaid at the end | No monthly payments, but the balance grows. Some lenders compound it monthly |
| Serviced | You pay the interest monthly, like an interest-only mortgage | Keeps the balance level, but you need the income to cover it |
On top of interest, expect some or all of these fees:
- Arrangement fee, often a percentage of the loan, usually added to it.
- Valuation fee, paid upfront and based on the property's value.
- Legal fees, for your solicitor and usually the lender's too.
- Exit fee, charged by some lenders when you repay. Many loans have none.
Worked example: a six-month chain break bridge
These figures are assumptions chosen to show the maths, not a quote. Your rate and fees will depend on the lender, property and loan size.
- Loan: £300,000, interest rolled up (simple interest), no exit fee
- Interest: 0.8% a month = £2,400 a month, so £14,400 over 6 months
- Arrangement fee: 2% = £6,000
- Valuation £1,500 and legal fees £2,000 (assumed)
- Total cost if repaid at 6 months: £23,900
- If the sale takes 12 months: interest doubles to £28,800 and the total rises to £38,300
If the lender compounded the interest monthly, six months would cost about £14,690 rather than £14,400.
How long can you borrow for, and how much?
Bridging loans are often set for up to 12 to 24 months, and the average term in the Q2 2026 Bridging Trends figures was 12 months. Regulated bridges are often limited to 12 months.
The amount depends on the property's value, the exit and how interest is handled. The average loan to value in Q2 2026 was 55%, and each lender sets its own maximum. Rolled-up or retained interest counts towards the limit, so the cash you receive can be noticeably less than the headline loan.
Why your exit strategy matters
The exit is the part that goes wrong most often. If your sale falls through or your refinance is declined, interest keeps building, and many lenders charge higher default interest or extension fees after the term ends.
Test your exit before you borrow
- Is your sale price realistic? Could you accept a lower offer and still repay?
- If refinancing, have you checked you qualify for the mortgage now, not just later?
- Does the term leave room for a sale taking months longer than planned?
- Do you have a back-up exit if the first one fails?
We cover this in more depth in exit strategies for regulated bridging loans.
A bridging loan is secured on property. Your home or property may be repossessed if you do not repay it.
How fast is bridging finance? Is "instant" realistic?
No bridging loan is truly instant. The lender still needs a valuation and legal work. The average completion time in Q2 2026 was 46 days, down from 53 days in the previous quarter.
Straightforward cases with a clean title and quick solicitors can be much faster. Having your ID, solicitor and exit evidence ready helps.
Alternatives to a bridging loan
| Option | When it can work |
|---|---|
| Port your mortgage | You move your existing deal to the new home, avoiding early repayment charges. It still relies on your sale |
| Let-to-buy | Switch your current home to a buy-to-let mortgage, release equity and keep it as a rental |
| Remortgage | Release equity from a property you own over a longer term, at a lower rate, if you have time and affordability |
| Delay the purchase | Ask the seller to wait, or move into rented housing after selling, so you buy chain-free |
Bridging finance FAQs
What is a bridging loan for homes?
It is a short-term loan secured on property that lets you buy a new home before your current one sells. If you or close family will live in the property, it is usually regulated by the FCA.
Do you pay monthly on a bridging loan?
Not always. Interest can be retained or rolled up, so there is nothing to pay until the end, or serviced, where you pay the interest each month.
Is bridging finance more expensive than a mortgage?
Yes, usually. Rates are monthly, and there are arrangement and other fees. It suits short-term needs where the speed or flexibility is worth the extra cost.
What happens if I can't repay a bridging loan on time?
Speak to the lender early. They may agree an extension, often with fees or higher interest. If you cannot repay, the lender can take action to sell the property.
Can I use bridging finance for property development?
Yes, for refurbishments, conversions and smaller projects. Larger new-build schemes usually need development finance, which releases money in stages as work progresses.
Is bridging finance right for you?
A bridge can save a purchase when timing goes wrong, but it only makes sense with a dependable exit and a clear view of the total cost if things take longer than planned.
Quick Mortgages is a whole-of-market broker based in Birmingham, helping clients across the UK. We work with regulated and unregulated bridging lenders through our specialist lending service, and we charge no broker fees.
Sources
- Bridging Trends Q2 2026, published 27 August 2026: average monthly rate 0.81%, LTV 55%, completion 46 days, term 12 months, 48% regulated, 22% second charge, uses (chain break 18%, investment purchase 18%, auction 14%)
- Bridging Trends Q1 2026, published 14 May 2026: average monthly rate 0.82%, LTV 52%, completion 53 days
- FCA Handbook, PERG 4.4: what is a regulated mortgage contract, the 40% dwelling test, related persons and bridging exclusions
- FCA Handbook, MCOB 1: application of the mortgage conduct rules
Correct on 17 September 2026 and may change.
Disclaimer:
This article is for general guidance purposes only and does not constitute legal, financial, or professional advice. Mortgage products and their terms can vary, and it is important to seek advice from a qualified, regulated professional who can assess your individual circumstances. Please ensure you consider your unique needs before making any financial decisions.
While every effort is made to ensure that the information provided on this blog is accurate and up-to-date, we do not guarantee its completeness or accuracy. The mortgage market can change rapidly, and the information on this blog may become outdated. We recommend verifying any information before acting on it and seeking tailored advice.
THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME OR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.
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