A bridging loan is a short-term loan that bridges the gap between buying a new property and selling an existing one, refinancing, or selling the subject property.

There are two types of bridging loans: closed and open loans. A closed bridging loan has a fixed repayment date. 

Closed bridging loans are used when the borrower knows they’ll have the funds for repayment soon. The buyer has exchanged contracts and is waiting for the sale to go through, the property is being refurbished prior to being refinanced or sold, or refinanced after an auction purchase. 

An open bridging loan has no fixed repayment date, but you’ll be expected to pay it off within three years. 

Be mindful that the lender will expect evidence of a clear repayment strategy, such as using equity from a property sale or remortgaging the property.

Lenders use a range of criteria when deciding loan eligibility, including: 

• Good credit (Although our range of lenders will allow some flexibility here, just discuss with your broker.)

• Proof of income (Again, if the exit is by sale of the property, income might be less relevant to the bridging lender.)

• Collateral security property (Bridging lenders can take charges (either first or second) to increase the loan to 100% or more if needed)

• A viable repayment strategy 

We can tap into our extensive network of bridging lenders to find the perfect loan for you. 

Bridging loans can be valuable financial tools when you need quick capital. But you need to understand their advantages and drawbacks to make an informed choice that suits your situation. 

Pros: 

• Fast access to funds

• Great for time-sensitive opportunities 

• Raise finance for investment properties

• Raise finance on an “unmortgageable” property 

• Flexible financing depending on the type of loan 

Cons: 

• Risk of asset loss in the event of a loan default 

• Higher interest rates and fees than a typical mortgage

• You’ll need reliable proof of a clear exit strategy to qualify

If you’re wondering whether a bridging loan is right for you, our expert brokers can assess your situation and recommend the best path forward. 

Absolutely, we’ll do everything in our power to get you funded. Our reputation for superior service has earned us seven UK Best Broker awards. We’ve secured funding for customers who came to us after stressful last-minute denials and funding complications, and we’ll do our best to help you as well. 

We also have years of experience working in some of the hardest sectors to secure funding for, including pubs, small hotels and retail shops, large HMO properties, and other traditionally difficult funding situations.

“Bridging mortgage” is a rarely used term for bridging finance. Although the term “mortgage” often refers to a long-term loan secured against property, it’s actually the act of taking the security against a property. So “bridging mortgage” is just another term for bridging finance!

Depending on your needs and circumstances, you can obtain a bridging mortgage for as little as £25,001 or for hundreds of millions of pounds. 

Your loan limits are set by the value of the property available for security–which can be your existing portfolio, as well as what you’re purchasing–and your ability to meet your exit plan. 
​​Lenders will typically allow funding of up to 75% loan to value, but up to 80% is available in some cases, and even 90% for refurbishments or conversions.

When you take out a bridging loan, a ‘charge’ will be placed on your property. This is a legal agreement prioritising which lenders will be repaid first should you default on your loans. 

Both a first and second charge bridging loan (and sometimes even a third charge) take your property as security in case you default on repayments. Typically, if you still have a mortgage on your property, the bridging loan will be a second charge loan, meaning that if you failed to meet repayments and the property was sold to pay off your debts, the mortgage would be paid off first.This means that a second charge bridging loan carries greater risk for the lender, which can be reflected in a higher interest rate or a lower loan-to-value ratio.

The Acorn.Finance lending panel includes well over 100 bridging lenders, each with their own lending criteria, specialisation, and uses. 

Your bridging finance broker will work with you to ensure that you get the funding you need, when you need it! 

Let’s sort your Bridging Loan NOW!