Finding the right property doesn’t always happen at a convenient moment. Sometimes your sale is still progressing, your mortgage offer is delayed, or you spot a home you love before everything else is lined up. In situations like these, bridging finance steps in as a short-term option that supports your move until your long-term funds are ready.
This guide explains what a bridging loan is, how it works in real-life scenarios, the different types available, and what you should know about rates and costs before deciding.
Not sure where to start? Explore free, no-obligation mortgage advice and get clarity on your options. Explore free no obligation mortgage advice
What is bridging finance?
Bridging finance is a short-term loan secured against a property. It’s often used when you need funds quickly, for example, to buy before you sell, to secure a property at auction, or to complete a purchase while waiting for your main mortgage.
You may have seen terms like “bridge loan mortgage” or “temporary property finance.” They all describe the same idea: a loan that fills the gap between now and when your longer-term funds become available.
Most bridging loans run for a few weeks to around a year. Because they’re designed for urgency, lenders focus heavily on your exit strategy which is how and when you’ll repay.
Related: Understanding the different types of mortgages
How do bridging loans work?
Bridging loans work by giving you short-term access to money secured against a property. You repay the loan when your sale completes, your mortgage switches over, or another agreed source of funds becomes available.
A lender will look at:
- The property you’re securing the loan against
- How much you want to borrow
- Your repayment plan (your “exit”)
- The loan-to-value (LTV)
- The condition and type of property
While bridging loan process timings vary, it’s usually quicker than a standard mortgage, often days rather than weeks. Interest is usually charged monthly, and you can either pay it as you go or add it to the final balance.
Related: What is a mortgage in principle?
Types of bridging loans
There are two main types of bridging loans you’ll come across:
Closed bridging loans
A closed bridging loan has a fixed repayment date. These are usually used when you’ve exchanged on your sale or have a confirmed completion date. Because timings are clear, lenders can sometimes offer more favourable terms.
Open bridging loans
An open bridging loan doesn’t have a confirmed repayment date. This is useful when your sale isn’t agreed yet or when the timeline still depends on a chain. You still need a realistic repayment plan, but the structure gives you more breathing room.
Bridging loans are also used for:
- Auction purchases
- Refurbishment projects
- Chain breaks
- Short-term investment opportunities
- Releasing equity quickly
Understanding the difference between open and closed options helps you choose the loan type that suits your situation best.
Related: Mortgage eligibility: what buyers need to know
Bridging loan rates
Bridging loan rates work differently from traditional mortgage rates. They’re usually charged monthly because the loan is short-term. While the percentage might look low at first, it adds up quickly if the loan needs to run longer than expected.
Rates depend on:
- The loan amount
- Your LTV
- Whether it’s an open or closed loan
- Your exit strategy
- The lender’s view of overall risk
Typical rates vary significantly between lenders, which is why comparing options is important. Always check whether interest is retained (added to the loan), serviced monthly, or rolled up to the end.
Related: How to get a mortgage if I’m self employed
How much does a bridging loan cost?
The cost of a bridging loan includes interest plus potential fees. Buyers often underestimate this part, so it’s worth being clear from the start.
You may come across:
- Monthly interest
- Arrangement fees
- Valuation costs
- Legal fees
- Broker fees
- Possible exit charges
The overall cost depends on your property, the size of the loan, your repayment timeline and the lender’s approach. Some buyers find the flexibility worth the extra cost, while others use bridging only in very specific circumstances.
Understanding these fees early helps you decide whether short-term finance aligns with your plans.
Related: What is a cashback mortgage? Benefits, risks, and how it works
Before you make your next move
If you’re thinking about whether a bridging loan could work for you, contact your local Whitegates branch when you’re ready, we’ll help you explore your options and move forward with confidence.
