Bridging Finance Explained: How It Works, Costs and When to Use It

Bridging finance is short-term lending secured against property, designed to bridge a gap: between buying and selling, between purchase and refinance, or between an opportunity and the slower long-term funding that will eventually replace it.

When bridging makes sense

• Auction purchases with a 28-day completion deadline.
• Buying before your existing property has sold.
• Property that is not yet mortgageable because it needs refurbishment or has no kitchen or bathroom.
• Releasing equity quickly for a business opportunity, a tax bill or a deposit.
• Buying land or property ahead of planning permission or development finance.

How it is structured

Terms typically run 3 to 24 months. Loans range from around £50,000 to many millions. Loan-to-value is usually up to 70–75% of the property's value, or higher if additional security is offered. Interest is charged monthly and, in most cases, is rolled up or retained from the loan so there are no monthly payments. You repay everything in one sum when the property is sold or refinanced.

What it costs

Bridging is more expensive than a mortgage because it is fast and short. Monthly interest is quoted rather than an annual rate. Add an arrangement fee, typically 1–2%, plus valuation and legal costs. Some lenders charge an exit fee; many do not. The total cost should always be weighed against the value of the opportunity it secures.

The exit is everything

Lenders will approve a bridging loan almost entirely on the strength of the exit. Sale requires evidence of value and a realistic marketing period. Refinance requires evidence that a term lender will lend when the bridge ends. A vague exit is the most common reason a bridging application fails.

Regulated and unregulated

Bridging on a property you or your family will live in is regulated. Bridging on investment property or business premises, which is what most of our clients need, is unregulated and can be arranged faster with more flexibility.

How quickly can it complete?

Terms can be issued the same day. With a desktop valuation and a proactive solicitor, straightforward cases complete in five to ten working days. Complex or multi-property deals take two to three weeks.

How DNA Finance helps

Bridging lenders vary enormously in speed, pricing and appetite. We match the deal to the right lender, manage the valuation and legal process, and keep everyone moving so the funds arrive when you need them.