A bridging loan is short-term money secured against property. You borrow for anywhere between three and twenty-four months, the interest is priced by the month rather than the year, and in most cases you don't make monthly payments at all — the interest is added to the loan and the whole lot is repaid in one go when you sell or refinance. That single repayment event is called the exit, and it is the most important word in bridging.
Why does the product exist? Because banks are slow and fussy. A term mortgage wants a liveable property, a tidy borrower and six weeks minimum of process. Plenty of good deals fail all three tests. The auction lot with no kitchen. The offices you're converting into flats. The company purchase that completes on Friday or dies. Bridging lenders underwrite the asset and the plan instead of your payslip, and they move in days.
The mechanics, briefly
A lender agrees a gross facility — say £300,000 against a £400,000 property. Out of that gross figure come the arrangement fee and, usually, the rolled-up interest for the term. What lands in your solicitor's account on day one is the net advance. New borrowers are caught out by this constantly: the headline number and the cheque are not the same thing, so always ask for both. The lender takes a first charge (or a second, behind an existing mortgage), you get on with the plan, and at the end you redeem the loan — capital plus accrued interest — from the sale proceeds or the refinance.
When it's the right tool
Three situations account for most of the bridging we've arranged since 2004. Speed: an auction clock, a seller who'll only wait a fortnight, a lender who's pulled out late. Condition: the property can't take a mortgage yet — no kitchen or bathroom, structural work needed, a change of use mid-flight. Complexity: the borrower, the title or the deal shape doesn't fit a high-street tick box, even though the deal itself is sound.
When it's the wrong tool
Bridging is dear money for a short job. If you're planning to hold an asset for years, or the honest answer to "how does this get repaid?" is a shrug, stop. A lender may still say yes — the security covers them either way — but you'd be renting expensive money with no way off it. Every month a bridge runs past its plan costs real cash.
The exit is the loan. An underwriter reads your repayment plan before anything else, and so should you: if the exit is solid, almost everything else is negotiable. If it isn't, nothing else matters.