Say you’ve found the perfect house, but your current one hasn’t sold yet. Or you’ve won a property at auction and the seller wants completion in 28 days. That gap between needing money now and having it later is exactly where bridging loans in the UK come in. They’re short-term, secured against property, and fast — but they’re not cheap, and the fine print matters.

We help clients read the legal side of these deals every week. Here’s what’s actually useful to know before you commit.

What a bridging loan actually is

A bridging loan is short-term borrowing, usually secured against a property or land. Terms typically run from a few months up to 12, sometimes 18. You pay it back either when your existing property sells, when longer-term finance kicks in, or when a project wraps up.

Lenders talk about two flavours:

• Closed bridge — you’ve got a firm exit date and a signed contract, like a sale that’s already exchanged. Lower risk, so often slightly cheaper.
• Open bridge — no fixed repayment date, just a plan. Costs more because the lender is taking on more uncertainty.

What bridging loans UK borrowers use them for

The classic case is a property chain that breaks. Your buyer pulls out, but you still want the place you’re moving to. A bridge covers the gap so you don’t lose it.

Other common reasons:

• Buying at auction, where you usually complete inside 28 days and a mortgage won’t move that fast.
• Buying a property a high-street lender won’t touch — no kitchen, no bathroom, structural issues — then refurbishing and refinancing.
• Freeing up cash for a business deal or tax bill against equity you already hold.

The real cost — read this bit twice

Interest on bridging loans is quoted monthly, not annually, which trips people up. A rate of 0.85% a month sounds tiny. Over a year that’s a little over 10%, plus fees.

Expect to see:

• Arrangement or facility fees, often 1–2% of the loan.
• Valuation fees, paid to the surveyor.
• Legal fees — both yours and, frequently, the lender’s.
• Exit fees on some products, charged when you repay.

On a £200,000 bridge over six months, the interest and fees can easily reach five figures. That’s fine if the numbers work. It’s painful if your exit slips and you’re stuck paying month after month.

The exit plan is everything

A bridging loan lives or dies by how you’ll repay it. Lenders will ask, and you should ask yourself harder questions than they do. If your exit is “I’ll sell the flat,” what happens if it sits on the market for eight months? If it’s “I’ll remortgage,” have you checked you’ll actually qualify?

We’ve seen borrowers get caught when a refurb overran and the refinance wasn’t ready. Build in breathing room. Don’t assume the best case.

Regulated or not?

Some bridging loans are regulated by the Financial Conduct Authority — usually where the loan is secured on a property you live in or will live in. Others, like most buy-to-let and commercial bridges, aren’t. That affects the protections you get, so it’s worth knowing which category you’re in. The FCA keeps a public register of authorised firms you can check at the FCA’s consumer pages before you deal with anyone.

Where legal advice fits in

Before you sign, a solicitor should check the loan agreement, the security being taken, and how the charge sits against any existing mortgage. Small clauses — default interest rates, early repayment terms, what counts as a breach — can cost you dearly later.

If a business is doing the borrowing, the structure gets more layered. Our corporate and commercial legal support covers exactly those situations, and you’ll find more practical guides over on our blog.

This article is general information, not advice for your specific situation. Every deal has its own quirks, and the right answer depends on your numbers, your property and your timeline.

A quick word before you rush

Speed is the whole point of a bridge, but speed shouldn’t mean skipping the checks. Get the valuation, read the terms, stress-test your exit.

Thinking about a bridging loan and want someone to look over the paperwork before you commit? Get in touch with our team — we’ll talk it through in plain English and flag anything that needs a second look.