Ten Quick Facts about Bridging Loans

Ten Quick Facts about Bridging Loans


Here are our Ten Quick Facts about your Bridging Loan.


  • 1

    Interest Rates are measured Per Month

    As a bridging loan is short term finance, interest rates are often expressed as “Per Month” rather than annually as is normal with loans such as mortgages. So, for example, a bridging loan rate shown as 1.5% per month is equivalent to 18% APR.

  • 2

    Bridging Loans can be arranged on a Fixed or Variable Rate

    With a fixed rate, the amount of your repayment each month will remain the same throughout the term of the loan.

    A variable rate will mean that your monthly repayments can go up or down.

  • 3

    Bridging loans are available to individual, partnership and corporate borrowers

  • 4

    A Bridging Loan can be arranged on a First or Second Charge basis

    Both are regulated by the Financial Conduct Authority.

  • 5

    Typical Term is between one and 12 months.

    Loan to Value on a Bridging Loan can be as high as 80%, and the term is typically between one and 12 months. Loans can also be set up on an “Open” basis, which means that no term is actually set for the length of the loan.

  • 6

    Bridging Loans have a number of uses

    Often used to buy a property while waiting for the sale of another property to complete, bridging finance is also used to buy property quickly at auction, purchase a property for the purpose of renovating then selling on, and to provide finance for any kind of business purpose.

  • 7

    The two most important factors in the application is the suitability of the property and proposed method of repaying the loan

    Applications for bridging finance are dealt with by most providers on a case by case basis, with the two most important factors to a lender being the suitability of the property being used as security and the proposed method of repaying the loan – sometimes referred to as the “exit”.

  • 8

    You may be able to “roll up” your interest

    It is possible with some providers to agree for the interest to be “rolled up” and added to the original advance. The original loan plus the rolled up interest is then repaid in full at the end of the agreed term.

  • 9

    A decision on an application can be made within a few days

    Providers understand the need for speed when processing applications for bridging finance. Typically a decision on an application will be made in a few days.

  • 10

    If you are relying on the completion of a property sale in order to repay a bridging loan you are taking the risk that the sale may be delayed or even fall through. Costs can quickly escalate in such circumstances.

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