The short answer
A bridging loan is a short-term loan, usually up to 24 months, secured against property. It's designed to be repaid in one go at the end, from a sale or a longer-term loan. Investors use it when speed matters or when a property can't yet get a normal mortgage.
How a bridge differs from a mortgage
| Bridging loan | Buy-to-let mortgage | |
|---|---|---|
| Term | Months, up to 24 | Years, often 25 |
| Speed | Typically 2–4 weeks | Typically 6–12 weeks |
| Interest | Monthly rate, usually retained or rolled up | Annual rate, paid monthly |
| Main test | Property value and exit | Rental cover and income |
| Property condition | Unmortgageable property accepted | Must be habitable |
Loan to value
LTV is the loan divided by the property's value. A £300,000 loan on a £400,000 property is 75% LTV. Most bridging lenders cap purchases at 75% and refinances at 70%, with lower limits for commercial property and land. The LTV includes any interest or fees added to the loan, which is why the amount you actually receive (the net loan) is less than the gross loan.
Retained, rolled up or serviced interest
- Retained: the lender holds back the interest for the term from the loan at the start. No monthly payments.
- Rolled up: interest is added to the balance each month and paid at the end. No monthly payments.
- Serviced: you pay interest monthly, like a mortgage. This keeps more of the loan available to you.
- Part and part: a mix of the above.
A worked example
An investor buys a flat for £250,000 and borrows £187,500 (75% LTV) for 12 months at 0.87% a month, with interest retained.
| Monthly interest | £1,631 |
| Interest for 12 months | £19,575 |
| Arrangement fee at 2% | £3,750 |
Figures are illustrative. Your rate depends on the property, valuation, your experience and credit, and the lender. Repaying early usually means you only pay interest for the months you used, subject to any minimum term.
The exit is everything
Every lender's first question is how you'll repay. A credible exit, such as a sale at a realistic price or a refinance you can show you'll qualify for, is what gets a bridge approved. Read our guide to bridging loan exit strategies.
When a bridge makes sense, and when it doesn't
A bridge is the right tool when speed, property condition or timing rule out a mortgage, and you have a clear way to repay within the term. It's the wrong tool if you're relying on a sale or refinance that isn't realistic, because short-term interest builds up quickly. If in doubt, talk to us before you commit.