What Is A Bridging Loan?
A bridging loan is a short-term secured loan designed to "bridge" a financial gap — most commonly between buying a new property and selling an existing one, or while awaiting longer-term finance. They provide fast access to capital, typically completing in days rather than weeks.
What Can It Be Used For?
- Property purchases where speed is essential (auctions, development opportunities)
- Refurbishment and conversion projects before refinancing onto a commercial mortgage
- Buying a new business premises before selling an existing one
- Short-term cash flow gaps while awaiting a sale or refinance
- Land purchase and planning gain strategies
How Much Can I Borrow?
Bridging loans for commercial purposes typically range from £50,000 to £5,000,000+. Most lenders will advance up to 70–75% loan-to-value (LTV), with some specialist lenders offering higher leverage depending on the exit strategy.
What Are The Interest Rates?
Rates are typically quoted monthly rather than annually, starting from around 0.55% per month. Interest can be rolled up into the loan (so there are no monthly payments) or serviced monthly. The total cost depends on term, LTV, property type and exit.
How Long Are The Terms?
- Typical terms range from 1 to 24 months
- Most commercial bridging loans are between 3 and 12 months
- A clear, credible exit strategy (sale, refinance) is essential
Regulated vs Unregulated Bridging
If the loan is secured against a property where you or a close family member lives (or intends to live), it is classed as regulated bridging and falls under FCA oversight. Commercial and investment property transactions are typically unregulated, which allows for greater flexibility and speed.