Name: Bridging Loan vs Remortgage: When Is a Bridging Loan Better? | Bridging Loan Online
Uploaded: 2025-04-16
Description: When speed is essential since remortgages take 8 to 12 weeks, when the property is unmortgageable in its current state, or when you only need funds for a short period and do not want to commit to a long-term mortgage.

Question 1

What is a bridging loan?

Accepted Answer

A bridging loan is a short-term loan providing quick funding, often used to bridge a financial gap between purchases or to seize time-sensitive opportunities. They typically last from a few weeks to 18 months and are secured against property or other assets.

Question 2

How does Bridging Loan Online work?

Accepted Answer

We are a bridging loan comparison service that simplifies your search. You submit your details, we assess your needs, then compare rates from 200+ lenders including mainstream banks and exclusive private lenders to find you the best deal.

Question 3

Who is eligible for a bridging loan?

Accepted Answer

Primarily individuals and businesses with a clear exit strategy to repay the loan. Most loans are secured against property or other substantial assets. Eligibility depends on the value of your security, your exit strategy, and ability to afford the payments.

Question 4

What can a bridging loan be used for?

Accepted Answer

Common uses include property purchases, business acquisitions, refurbishments, auction finance, breaking property chains, commercial development, stock finance, and accessing funds from legal settlements.

Question 5

How much can I borrow with a bridging loan?

Accepted Answer

Typically from £25,000 to several million pounds. Most lenders offer up to 75% LTV (loan-to-value), though some may lend more depending on the strength of your case and the quality of the security.

Question 6

What interest rates do bridging loans charge?

Accepted Answer

Bridging loan rates in the UK typically range from 0.4% to 1.5% per month depending on the loan size, LTV ratio, and your risk profile. The better your exit strategy and security, the lower the rate.

Question 7

What fees are involved in a bridging loan?

Accepted Answer

Common fees include an arrangement fee (1 to 2% of the loan), valuation fee, legal fees for both you and the lender, and sometimes an exit fee of 0.5 to 1%. Always ask for a full cost illustration before you commit.

Question 8

What is a rolled-up interest bridging loan?

Accepted Answer

Instead of making monthly interest payments, rolled-up interest means the interest accumulates and is added to the loan balance, then repaid in full at the end of the term. This helps borrowers who do not want monthly payments during the loan term.

Question 9

How do I apply for a bridging loan online?

Accepted Answer

Simply complete our online enquiry form with key information about you and your funding needs. The process takes just a few minutes, and a specialist will be in touch quickly with your options.

Question 10

What documents do I need for a bridging loan application?

Accepted Answer

Typically required documents include proof of ID, proof of address, bank statements, details about the security property, and information about your exit strategy. Specific requirements vary by lender and loan type.

Question 11

How long does it take to get approved for a bridging loan?

Accepted Answer

You can often receive a decision in principle within 24 hours. Full approval and funding can be completed in as little as 7 days, though complex cases may take 2 to 4 weeks.

Question 12

How are bridging loans repaid?

Accepted Answer

Bridging loans are repaid in full at the end of the term. Common exit strategies include sale of the property, refinancing onto a mortgage, sale of another asset, business sale proceeds, or receipt of expected funds such as inheritance or a legal settlement.

Question 13

What happens if I cannot repay my bridging loan on time?

Accepted Answer

Contact your lender immediately if you anticipate difficulties. Options may include extending the loan term at extra cost, finding alternative exit strategies, or refinancing. Early communication is key to finding solutions before default occurs.

Question 14

Are bridging loans regulated in the UK?

Accepted Answer

Residential bridging loans, where the security is your main home or a home you intend to live in, are regulated by the Financial Conduct Authority. Commercial bridging loans are not FCA regulated but major lenders follow the ASTL code of conduct.

Question 15

Why choose Bridging Loan Online?

Accepted Answer

We provide access to over 200 specialist UK lenders, all mainstream banks, and exclusive private lenders. Our comparison service ensures you get the best rates and terms, with expert personal support throughout the process at no extra cost to you.

Question 16

Do you charge a fee for your services?

Accepted Answer

We are typically compensated by the lender upon successful loan completion, so our expert comparison service and support is provided at no extra cost to you. Any fees are disclosed upfront and included in your quote.

Question 17

Is my personal information secure on your website?

Accepted Answer

Yes. We use bank-level security measures including SSL encryption to protect your data. We are fully GDPR compliant and never share your information without your consent.

Question 18

Can I speak to someone directly about my bridging loan needs?

Accepted Answer

Yes. Contact our specialist Adam directly at 07973 197535 by call or WhatsApp, or use our contact form for same-day personalised guidance.

Question 19

What is the difference between an open and closed bridging loan?

Accepted Answer

A closed bridging loan has a fixed repayment date, usually because contracts are already exchanged on a property sale. An open bridging loan has no fixed end date but a lender-set maximum term, used when the exit date is less certain.

Question 20

What is a first charge and second charge bridging loan?

Accepted Answer

A first charge bridging loan is secured on a property with no other mortgage on it, giving the lender first claim if you default. A second charge loan sits behind an existing mortgage on the same property and typically carries higher rates.

Question 21

What is the difference between a bridging loan and a mortgage?

Accepted Answer

A mortgage is a long-term loan of 25 years or more with monthly repayments. A bridging loan is short-term (up to 18 months), arranged much faster, and designed for temporary funding gaps. It is repaid in full at the end rather than spread over years.

Question 22

What is a development bridging loan?

Accepted Answer

A development bridging loan finances the construction or significant renovation of a property. Funds are often released in stages as build milestones are hit, with the exit strategy usually being a sale or refinance once the development is complete.

Question 23

How is the total cost of a bridging loan calculated?

Accepted Answer

Take the loan amount, apply the monthly interest rate, multiply by the number of months, and add all fees including arrangement, valuation, and legal fees. For example a £200,000 loan at 0.75% per month for 6 months equals £9,000 interest plus fees. Always ask for a full cost illustration.

Question 24

Are bridging loan interest rates negotiable?

Accepted Answer

Yes, especially through a specialist broker with established lender relationships. The rate depends on your LTV, loan size, exit strategy strength, and borrower profile. A broker can access exclusive rates not available directly.

Question 25

What is LTV in bridging loans and why does it matter?

Accepted Answer

LTV is the loan amount expressed as a percentage of the property value. If your property is worth £400,000 and you need £280,000, that is 70% LTV. Lower LTV means less risk for the lender and typically better interest rates for you.

Question 26

Can I borrow 100% of a property's purchase price with a bridging loan?

Accepted Answer

You can borrow up to 100% of the purchase price if you have additional security, such as another property, to offer the lender. Without additional security the maximum is typically 70 to 75% LTV.

Question 27

Can I get a bridging loan with bad credit?

Accepted Answer

Yes. Many specialist bridging lenders focus on the value of the security property and the strength of your exit strategy rather than your credit history. Bad credit may affect the rate offered but will not automatically disqualify you.

Question 28

Can a business get a bridging loan?

Accepted Answer

Yes. Businesses regularly use bridging loans for commercial property purchases, business acquisitions, cash flow gaps, stock purchases, and equipment finance. Commercial bridging loans are not FCA regulated but follow strong industry standards.

Question 29

Do I need a good credit score to get a bridging loan?

Accepted Answer

Not necessarily. Bridging lenders focus on the asset (security property) and your exit strategy rather than a perfect credit score. Missed payments, CCJs, or defaults do not automatically disqualify you.

Question 30

Can I get a bridging loan if I am self-employed?

Accepted Answer

Yes. Since bridging loans are primarily asset-backed, proof of income is often far less critical than with a traditional mortgage. Your exit strategy matters far more than how you earn your income.

Question 31

Can I get a bridging loan if I already have a mortgage?

Accepted Answer

Yes. You can take a second charge bridging loan against a property that already has a mortgage, or secure the bridge against a different property entirely. Your broker will review your commitments and identify the most cost-effective option.

Question 32

Can a first-time buyer get a bridging loan?

Accepted Answer

Yes, though lenders may apply stricter requirements around exit strategy and LTV. The most common use cases for first-time buyers are auction finance and buying unmortgageable properties to renovate and then refinance.

Question 33

How quickly can I get a decision in principle on a bridging loan?

Accepted Answer

An initial decision in principle can often be issued the same day, sometimes within hours, once you have provided the basic details about your situation, the security property, and your exit strategy.

Question 34

Why is a bridging loan faster to arrange than a mortgage?

Accepted Answer

Bridging lenders use specialist underwriters and streamlined processes. They assess fewer criteria — mainly the asset and your exit strategy — compared to mortgage lenders who carry out a full affordability, income, employment, and credit assessment.

Question 35

What can slow down a bridging loan application?

Accepted Answer

Common delays include slow legal conveyancing, complex property titles, planning issues, valuation delays, or incomplete documentation. Having all your paperwork ready and using an experienced broker significantly reduces the risk of delays.

Question 36

Can I use a bridging loan to buy a property at auction?

Accepted Answer

Yes. Auction finance is one of the most common uses. Auction purchases require completion within 28 days, which is too fast for a traditional mortgage. A bridging loan can be arranged in time, then replaced with a standard mortgage afterwards.

Question 37

Can I use a bridging loan to break a property chain?

Accepted Answer

Yes. If you have found your next home but have not yet sold your current property, a bridging loan lets you complete the purchase immediately. You then repay when your existing home sells, removing all the stress of a chain collapsing.

Question 38

Can I use a bridging loan to renovate a property?

Accepted Answer

Absolutely. Bridging loans are ideal for buying and refurbishing properties that are uninhabitable and therefore unmortgageable. Once renovation is complete, the property can be sold or remortgaged at the higher finished value, repaying the bridge.

Question 39

Can a bridging loan be used for commercial property?

Accepted Answer

Yes. Commercial bridging loans are available for office buildings, retail units, warehouses, mixed-use properties, and land. They work on the same principles as residential bridging loans but are not FCA regulated.

Question 40

Can I use a bridging loan to pay a tax bill?

Accepted Answer

Yes. HMRC tax bills including inheritance tax, which must be paid before probate is granted, can be funded with a bridging loan secured against property. This buys time to arrange a longer-term solution or await the proceeds of an estate sale.

Question 41

Can I use a bridging loan to buy land?

Accepted Answer

Yes, though lenders are more cautious with land due to its less liquid nature. Land bridging loans are typically available at lower LTVs of 50 to 60% with higher rates. A strong exit strategy such as obtaining planning permission and then selling is essential.

Question 42

What is an exit strategy and why do lenders require one?

Accepted Answer

Your exit strategy is your concrete plan to repay the bridging loan at the end of the term. Lenders require a credible and realistic exit before approving any application. Examples include selling the property once renovated, refinancing onto a mortgage, or receiving inheritance funds.

Question 43

Can I repay a bridging loan early?

Accepted Answer

Yes, and many bridging loans carry no early repayment charges. Always confirm this in your loan agreement before signing. Repaying early saves you money because interest accrues monthly, so the sooner you repay the less you pay in total.

Question 44

What is the maximum term for a bridging loan?

Accepted Answer

Most bridging loans are set for a maximum of 12 months. Some lenders extend to 18 months, and in specialist cases up to 24 months. There is no benefit in taking a longer term than necessary as interest accumulates throughout.

Question 45

What does it mean for a bridging loan to be FCA regulated?

Accepted Answer

FCA regulation means you have legal protections. The lender must treat you fairly, provide clear and accurate information, and adhere to responsible lending standards. If things go wrong you can complain to the Financial Ombudsman Service.

Question 46

What is the ASTL and why does it matter?

Accepted Answer

The Association of Short Term Lenders is the industry body for bridging lenders. ASTL members commit to responsible lending, transparent pricing, and fair treatment of borrowers. For unregulated commercial bridging loans, ASTL membership provides important additional assurance.

Question 47

Can I get a bridging loan on an uninhabitable property?

Accepted Answer

Yes. This is a key advantage of bridging loans. Mainstream mortgage lenders will not lend on properties without a functional kitchen, bathroom, or with serious structural issues. Bridging lenders will, making them the go-to solution for renovation projects.

Question 48

Can I get a bridging loan on a buy-to-let property?

Accepted Answer

Yes. Buy-to-let bridging loans are commonly used to purchase properties at auction, fund renovations before a property is ready to let, or bridge a gap before a standard buy-to-let mortgage completes.

Question 49

Should I use a bridging loan broker or go directly to a lender?

Accepted Answer

Using a specialist broker gives you access to 200+ lenders, including many who only work through brokers, and means someone is negotiating rates on your behalf. Going direct to a single lender limits your options and you are unlikely to see the most competitive rates.

Question 50

When is a bridging loan better than remortgaging?

Accepted Answer

When speed is essential since remortgages take 8 to 12 weeks, when the property is unmortgageable in its current state, or when you only need funds for a short period and do not want to commit to a long-term mortgage.

Bridging Loan FAQs — 50 Questions Answered by UK Specialists