Bridging loan
A bridging loan is a short-term loan secured on property, used to fund a purchase or refurbishment until longer-term finance or a sale replaces it. Terms run from one to 24 months, interest is charged monthly rather than annually, and the lender assesses the loan on the property and the exit strategy rather than on the borrower's income. For landlords it is the standard way to buy at auction, to purchase a property that is not mortgageable on day one, or to fund works before refinancing on to a buy-to-let mortgage.
Cost and terms
As at September 2026, published first-charge rates on residential security run from about 0.79% a month at 60% loan-to-value to just over 1% at 70%, with an arrangement fee of around 2%, a valuation fee and both sides' legal costs. Most lenders cap standard residential bridging at 70% to 75% of value; a few lend against open market value rather than purchase price on undervalue deals. Interest is serviced monthly, retained from the advance or rolled up and paid at exit; rolled-up interest reduces the net advance, so the headline LTV overstates the cash received. MT Finance's Bridging Trends survey put the market average at 0.82% a month in the first quarter of 2026, the average term at 12 months and the average completion at 53 days.
Regulated and unregulated
A bridging loan is regulated by the FCA when the borrower or an immediate family member occupies, or will occupy, at least 40% of the property, because it then meets the definition of a regulated mortgage contract in article 61 of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001. A landlord bridging an investment property takes an unregulated loan, which can run to 24 months and can be made to a special purpose vehicle; regulated bridging is capped at 12 months with fuller affordability checks.
First and second charge
A first-charge bridge sits ahead of any other lender on the security; a second charge sits behind an existing mortgage and is priced higher. Development finance is a different product, drawn in stages against a monitoring surveyor's certificates, and is used where the works amount to construction rather than refurbishment.
When landlords use it
Auction purchases, which must complete within 28 days; properties without a kitchen, bathroom or habitable condition that no mortgage lender will accept; refurbishments intended to lift value or rent before refinancing; and undervalue purchases where the seller needs speed. A property auction is the commonest trigger. A bridge does not make sense as a way to avoid a mortgage affordability test, because the exit faces the same test with interest added.
From working with landlords across the UK who have bridged, the loans that go wrong share one feature: the refinance valuation the plan depended on was never agreed with the exit lender before drawdown. Every month of bridging interest is a deductible finance cost against the rental business once the property lets, and August's expense tracking records it against the right property.
Worked figure
A £200,000 bridge at 0.95% a month for nine months with a 2% fee, a £600 valuation and £1,500 of legal costs costs about £23,200 before exit fees. Run the numbers through the buy-to-let investment calculator with the bridging cost included, and compare lenders in our guide to the best bridging loan lenders for landlords. The auction process itself is in buying property at auction.
Frequently asked questions
How much does a £200,000 bridging loan cost?
Roughly £1,600 to £2,100 a month in interest at current rates, plus about £4,000 in arrangement fees and £2,000 in valuation and legal costs, so a nine-month loan costs in the region of £20,000 to £25,000 before exit.
Who is eligible for a bridging loan?
Any individual or company with adequate security and a credible exit. Asset-based lenders such as MT Finance do not credit score and accept first-time investors; others prefer clean credit and landlord experience.
Do banks offer bridging loans?
High-street banks rarely do. Specialist lenders and specialist banks such as Shawbrook, United Trust Bank and Hampshire Trust Bank dominate, nearly all through brokers.
Last reviewed: September 2026.
