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Bridging loans

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MoneySuperMarket is a credit broker not a lender. You must be 18 or over and a UK resident. Your home is at risk if you cannot keep up with repayments.

What is a bridging loan?

A bridging loan is a short-term loan, where the repayment period can be as little as a few weeks. These loans are meant to ‘bridge the gap’ and are typically used when you need to buy a property before selling another.

A bridge loan is a type of secured loan, meaning that you put up a secure asset as collateral - such as your home.

It’s important to remember that you run the risk of losing your property if you can’t keep up with repayments.

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We’ve partnered with Fluent Money to help you find the right bridging loan

We’ve partnered with specialist loan provider Fluent Money to help you find the right secured loan for your needs.

MoneySuperMarket is a credit broker not a lender. You must be 18 or over and a UK resident. Your home is at risk if you cannot keep up with repayments.

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How do bridging loans work?

Bridge loans help to 'bridge the gap' when you need to borrow money for a short amount of time. They're most commonly used when you want to buy a new home, but your current home hasn't been sold yet. Here’s how a typical bridging loan might work: 

  • Deposit needed

    You need to put down £100,000 deposit to help buy a new £350,000 house. The rest will be borrowed through a mortgage. 


  • Plug the gap

    Because you’re waiting to sell your existing property you only have £25,000 in savings, leaving a shortfall of £75,000 for the deposit. 


  • Use bridge finance

    You choose to take out a bridging loan for £75,000 to 'bridge the gap' for the deposit until your house sale goes through. 


  • Pay back loan

    When your current house sells for £250,000 you repay the bridging loan and the interest to clear the borrowing. 

What are the different types of bridge loans?

  • First charge and second charge

    When you take out a bridging loan, a ‘charge’ is placed on your property. This is a legal agreement that lists the order in which lenders will be repaid if you're unable to repay your loans. If you have an existing mortgage, the bridge loan becomes a second charge.

  • Fixed or variable interest

    Bridging-loan interest rates can be either fixed or variable. With a fixed rate you’ll know exactly how much you’ll be charged and your monthly repayments will be the same for the duration of the loan. With a variable rate bridge loan, the interest rate can change.

  • Open bridge loan

    An open bridge loan means there’s no set date for paying off the loan, but you’ll usually be expected to pay it off within a year, or 24 months in certain circumstances. This type of loan may suit you if you’ve found a house you want to buy but haven’t yet sold your current home.

  • Closed bridge loan

    With a closed loan, you’ll have a fixed date to repay your loan. A closed bridge loan may suit you if you’re selling a property and waiting for completion to receive the money to put towards your new home.

What can I use a bridge loan for?

Bridging loans are used for a variety of reasons to help bridge the gap when you don’t have the immediate funds available, including:

  • Buying property at auction

    You may need to borrow money quickly to secure a house at auction when a mortgage will take too long to come through.

  • Renovation

    Bridging loans are often used to cover renovation costs until it’s possible to remortgage to release equity for the project.

  • Purchasing land

    Could help cover the cost of buying the land and the building work for a new home, while you apply for a mortgage. 

  • Fix a broken property chain

    A way of continuing with the purchase of a new home, even if the sale of your property falls through and you need a new buyer.

Why compare bridge loans with MoneySuperMarket?

  • It's clear and easy

    Just follow our step-by-step process. We’ll start by asking you a few simple questions about your circumstances and what you need the loan for.

  • Expert guidance

    Working with our partner Fluent Money, you’ll have direct access to experienced and specialist advisers. 

  • Won't affect your credit score

    You don't have to worry about your credit score when you compare bridging loans with us, because a soft search is carried out.

How much do bridge loans cost?

  • Valuation fees: To be approved for a bridging loan you’ll usually have a valuation on your property. Often, we can approach lenders on your behalf who will do a desktop or automated valuation, saving you time and money 

  • Arrangement fees: Costs tend to include lender arrangement fees, which usually amount to a percentage of the loan (typically 2%)  

  • Exit fees: Lenders sometimes charge a redemption fee when the loan comes to an end, most of the lenders we work with do not charge exit fees 

  • Legal Fees: Both yourself and the lender will require legal representation, speak to your adviser who can provide an indication of cost. Some lenders have solicitors who can represent both themselves and you (dual rep) which can help save you time and money 



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What are the pros and cons of bridging loans?

There are several factors to weigh up when deciding if a bridging loan is the right choice for you. Here are some potential advantages and disadvantages to consider:

  • Tick

    Advantages

    • Quick payout: Unlike a conventional mortgage, a bridge loan could be paid out in a matter of days

    • Larger loans: Bridging loans are secured against property so you should be able to borrow more money

    • Range of options: They provide choice and flexibility such as fixed or variable interest and open-ended or closed loan terms

  • Cross

    Disadvantages

    • Interest rates: Bridge loans tend to have higher interest rates than other types of loan, with interest typically calculated monthly

    • Fees: There can often be fees to pay, such as exit fees, arrangement fees and legal fees

    • Risk of repossession: Bridging loans are secured against your property, so your home is at risk if you can’t keep up with repayments

Kate Hughes

Our expert says

"

If you need a bridging loan, you’re often in a stressful situation – moving house or building a property perhaps, when the finances aren’t quite lining up. There’s no doubt that if you can get one, they can stop everything grinding to a halt, but they’re expensive. As with any financial contract, go in carefully, armed with a good understanding of the full details behind this extra borrowing, and with a strong plan for paying it back on time and in full.

"
- Kate Hughes, Money & Savings Expert

How to compare bridging loans with MoneySuperMarket and our partner Fluent

See personalised deals and find the right bridging loan for you with MoneySuperMarket and our partner Fluent Money. 

  • Tell us about yourself

    We’ll need to know a bit about you. Register yourself as a homeowner to see secured loans in the results. 

  • We’ll browse the market

    We’ll show you loans you’re eligible for – if you choose a secured loan you’ll need to register your interest with our partner Fluent. 

  • Weigh up your options

    Fluent will contact you to discuss your secured loan options. Once you’ve decided on a loan you can make your full application

A second charge loan applies if you already have a loan secured against a property that already has an outstanding mortgage. So for improvements such as extensions, you’d need to take out a second charge bridging loan. The distinction lets the lender know who has priority in the repayment if you can’t pay off the loan by the end of the term. If however you’re taking out a new loan secured against the property, you’d qualify for the first charge loan.

A bridging loan will be classed as regulated if a property you offer as security is your own home. Certain lenders do not offer regulated bridging loans so it is important to take appropriate advice from an expert in the first instance.

Interest rates on bridging loans will differ depending on the borrower’s financial situation and the loan provider’s view of the transaction. If they believe the loan represents more of a risk they are likely to make it more expensive with higher interest rates.   

Rates will also depend on how much equity you have in your home (your security) and your credit rating. Interest rates on bridging loans are also charged monthly, so bear this in mind as the annual rate may work out higher than it first appears. 

It is worth noting that interest is often ‘rolled up’ and charged at the end meaning there are no monthly repayments for you to make during the term.

Yes, you could get a bridge loan with a poor credit score, but you may get less favourable rates than someone with a better credit rating.

The repayment period on your bridging loan will depend on your lender, but these are short-term loans which can last up to 12 months.

As this is a short-term loan, it will be approved reasonably quickly. You should expect to wait between 5-21 days for approval.

You can use our loans calculator to figure out how much you could borrow.

If you can’t make your bridging loan repayments, then you could lose your home and damage your credit score.

Yes, you can. Some landlords may apply for a bridging loan to help them secure a deposit for their buy-to-let property.

While a bridging loan can be arranged quicker than a mortgage, it can still take anything from a few days to several weeks to complete. This is because it’s a secured loan, and if you’re using your property as collateral, a valuation is usually needed, as well as credit checks.

As a bridge loan requires you to put down your current home or other valuable asset as collateral, you’ll need equity in your property. How much equity you’ll need for a bridging loan will depend on the provider, but our partner Fluent asks that you have at least 35% equity. 

Whether a bridge loan is the right choice for you will depend on your personal, financial circumstances and whether you’re willing to use your home as collateral. Like any secured loan, a bridge loan carries risk. You could lose your home if you struggle to keep up with repayments, so make sure you consider all your options before you apply.

Not sure if a bridging loan is the right option for you? Here’s some potential alternatives: 

  • Second mortgage: If a bridging loan isn’t right for you, you could consider getting a second mortgage. Second mortgages use the capital (or equity) in your home as security 

  • Personal loan: Personal loans are unsecured, so you’re not borrowing against your property and your home isn’t at risk. But this means there’s a limit to how much you can borrow, usually up to £25,000 

  • Remortgage: Restructuring your existing mortgage can be a way to release funds – if you have sufficient equity built up in your home. You can switch to a new mortgage deal with your existing lender or move to a new lender, increasing your mortgage to release cash. It’s also a good chance to find a lower mortgage interest rate if possible 



Whether a bridging loan is the right choice for you will depend on your personal, financial situation and what you’re looking for when it comes to borrowing. 

A bridging loan may suit you if you’re looking for a short-term loan for a large sum of money that you’ll be able to pay back quickly. To be eligible for a bridging loan in the UK, you’ll need to meet the following criteria: You must be aged 18 or over, have a valuable asset to use as collateral (usually your home) and be UK resident. 



Generally bridging loan providers are prepared to lend between £5,000 to tens of millions of pounds. But, of course, in practice how much you’ll be able to borrow will depend on your personal circumstances.

As a rule of thumb, lenders will typically let you borrow up to 75% of the value of your home. And in most cases will allow you to borrow more when you’re taking out a first-charge bridging loan than a second charge loan.

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You might be wondering if we work with all the companies in the market, or if our commercial relationships with our partners might make us feature one company above another. We’ve got nothing to hide, and we want to give you clear answers when it comes to questions like these, so we’ve pulled together everything you need to know on this page.

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