- Bridging loan
- a short-term loan secured on property, used to cover a timing gap until longer term finance or a sale completes.
- Open bridging loan
- a bridge with no fixed repayment date. The exit is expected but not contractually fixed, so lenders usually treat it as higher risk.
- Closed bridging loan
- a bridge with a fixed exit date, for example when a property sale is due to complete on a known day.
- Gross loan
- the total facility agreed with the lender before retained interest and upfront fees are deducted.
- Net loan
- the cash you actually receive after retained or rolled up interest and fees are taken from the gross advance.
- Exit strategy
- how you plan to repay the bridge, such as selling a property, refinancing onto a mortgage, or completing a development and refinancing.
- First charge
- the main mortgage or loan secured against the property. It is repaid first if the property is sold.
- Second charge
- an additional loan behind an existing first charge mortgage, with higher risk for the lender.
Key facts
- Bridging loans are short-term, secured on property, and typically run from a few months to around eighteen months
- Interest is usually quoted per month and can be retained, rolled up, serviced monthly, or deducted from the advance
- Lenders require a credible exit strategy before they will lend
- Rates and fees vary by lender and deal. Treat any figures in this guide as typical or illustrative, not statutory
Estimate your own costs with the bridging loan calculator. If your exit is a refinance, compare payments in the remortgage calculator and read our remortgage guide UK. More property tools are on the property hub.
What is a bridging loan and when it is used
A bridging loan is short-term finance secured against property. It is designed to cover a gap when you need money quickly but longer term funding or a sale is not yet in place. Typical uses include breaking a property chain, buying at auction where completion is fast, funding refurbishment before you refinance, or buying a new home before your current one sells.
Bridging is usually more expensive than a standard mortgage because it is short term and often arranged quickly. It suits situations where speed or flexibility matters and you have a clear plan to repay. It is less suitable as a long term substitute for a mortgage.
Open versus closed bridging loans
A closed bridging loan has a fixed repayment date. That might be the completion date of a property sale you have already exchanged on. Because the exit is defined, lenders often view closed bridges as lower risk and may offer more competitive indicative terms.
An open bridging loan has no fixed repayment date. You still need an exit plan, such as selling a property or refinancing, but the date is not fixed in the loan agreement. Open bridges are typically priced higher and may come with stricter criteria or shorter maximum terms.
First charge versus second charge
A first charge bridging loan is the main loan on the property. If the property is sold, the first charge lender is repaid before anyone else.
A second charge bridge sits behind an existing mortgage. The combined loan to value across both loans must stay within the lender's limits, and second charge rates are often higher because the lender is further down the repayment queue if things go wrong.
How interest is charged
Bridging loan interest is usually quoted as a monthly rate, not an annual percentage rate like a mortgage. The principal is typically repaid in one lump sum at the end of the term, so monthly interest is often calculated on the full loan balance throughout.
Interest can be structured in several ways:
- Retained or rolled up: interest is added to the loan and paid at exit. You do not make monthly payments, but the total owed grows.
- Serviced monthly: you pay interest each month from your own cash flow.
- Deducted at drawdown: interest for part or all of the term is taken from the advance when the loan completes, reducing what you receive upfront.
A gross loan is the total facility before deductions. The net loan is what lands in your account after retained interest and fees. Always compare deals on net proceeds and total cost, not just the headline monthly rate. Indicative rates vary widely by lender, loan to value, and exit strength. Use the bridging loan calculator to model monthly interest and fees for your scenario.
Loan to value and exit strategy
Bridging lenders set a maximum loan to value (LTV) based on the property value, often using a conservative valuation. Typical maximum LTV might range from around 65% to 75% for residential bridges, but limits vary by lender, property type, and whether the loan is first or second charge.
Lenders will ask for a credible exit strategy before approving a bridge. Common exits include selling the security property, selling another property, refinancing onto a residential or buy to let mortgage once works are complete, or receiving funds from a defined event such as an inheritance.
If the exit is delayed, you may need to extend the loan, pay extension fees, or refinance on worse terms. That is why a backup plan matters, especially on open bridges.
Regulated versus unregulated bridging
Bridging on a property you live in, or intend to live in, is usually regulated and falls under FCA mortgage and consumer credit rules. You get stronger protections, but the application process can be slower and the product range narrower.
Bridging on investment or commercial property, or on a home you will never occupy, is often unregulated. That can mean faster decisions, but fewer regulatory safeguards. Treat unregulated lending with extra care and take independent advice if you are unsure.
Typical costs and fees
Bridging loan costs vary by lender, broker, and deal. The figures below are indicative ranges, not statutory rates or guaranteed quotes.
| Fee | Typical indicative range | Notes |
|---|---|---|
| Monthly interest | Often quoted per month | Varies by LTV, exit, and open versus closed |
| Arrangement fee | Around 1% to 2% of the loan | Sometimes added to the loan |
| Valuation | Often £500 to £1,500 | Depends on property type |
| Legal fees | Often £1,000 to £2,500 | Yours and sometimes the lender's |
| Exit or redemption fee | 0% to around 1% | Not all lenders charge this |
| Broker fee | 0% to around 1% | If you use a broker |
Add your own assumptions in the bridging loan calculator to see how arrangement, exit, valuation, and legal costs affect the total.
Alternatives to a bridging loan
Before taking a bridge, consider whether another route is cheaper or lower risk:
- Remortgage: if you have enough equity and time, releasing funds through a standard remortgage may cost less. See the remortgage guide UK and remortgage calculator.
- Further advance: an extra loan with your existing mortgage lender, if they will allow it and timing works.
- Secured loan: a second charge loan over a longer term than a bridge, though still secured on your home.
- Let to buy: keeping your current home as a rental and buying the next home with a new mortgage, instead of bridging the gap between sale and purchase.
Bridging Loan Calculator UK
Model monthly interest, arrangement and exit fees, and total bridging cost for your loan amount and term.
General information, not financial advice
This guide explains how bridging loans work in the UK. It is general information, not financial advice. Rates and fees are indicative only and vary by lender. A qualified adviser can help you decide whether a bridge is right for your circumstances.Related Calculators
Frequently Asked Questions
A bridging loan is short-term finance secured on property. You borrow for a few months up to around eighteen months, interest is charged monthly on the balance, and you repay the loan in full at the end through your exit, such as a sale or refinance.
A closed bridge has a fixed repayment date, often tied to a known sale completion. An open bridge has no fixed date, so the exit is planned but not contractually set. Open bridges are usually treated as higher risk and may carry higher indicative rates.
Interest is typically quoted per month on the loan balance. It may be rolled up and paid at exit, serviced monthly from your cash flow, or retained and deducted from the advance when the loan completes. The structure affects your net proceeds and total cost.
The gross loan is the total facility agreed. The net loan is what you receive after retained interest and upfront fees are deducted. Comparing gross headline rates alone can understate the true cost.
Maximum LTV varies by lender, property, and charge position. Residential first charge bridges often sit in a typical range of roughly 65% to 75%, but second charge or commercial deals may be lower. The lender's valuation drives the limit.
Your exit is how you will repay the bridge, such as selling the property or refinancing onto a mortgage. Lenders need a credible exit because bridging is short term. If the exit fails, you may face extension fees, higher rates, or pressure to sell.
Indicative costs usually include a monthly interest charge, an arrangement fee often around 1% to 2%, valuation and legal fees, and sometimes an exit or broker fee. Exact amounts vary by lender and are not fixed by law.
Depending on timing and equity, alternatives include remortgaging, a further advance with your existing lender, a secured loan over a longer term, or a let to buy structure instead of buying before you sell.
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James Hartley is a Chartered Management Accountant (CIMA) with more than eight years of experience in UK tax, payroll and compliance. He holds a BSc in Finance and Economics from the University of Manchester and spent his early career at a Big 4 accounting firm. He founded WhatsUK to build free UK financial calculators and guides verified against official HMRC sources. He authors every calculator and article on WhatsUK.
Sources & Official References
- FCA: Mortgages and secured lending- Regulated lending protections on residential property
- ASTL: Bridging industry statistics- Market context for short-term secured lending
- MoneyHelper: Buying a home- Impartial guidance on property purchase options
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Disclaimer: This calculator provides estimates based on standard HMRC rates for 2026/27. Results may vary based on individual circumstances. This is not financial advice. Always consult a qualified accountant or CIMA-qualified financial adviser for personal tax matters.