Bridging loans – Short-term finance for property and business
A bridging loan is fast, short-term finance to cover costs while you await longer-term funding. Compare options from 80+ UK lenders and find the right fit in minutes.
Last updated: October 2025, edited by Joe Morley, reviewed by Vivek Seda
What is a bridging loan and how it works
What is a bridging loan?
A bridging loan is a secured, short-term loan designed to provide fast access to cash. It’s typically repaid within 3 to 24 months, either when property is sold, or when longer-term finance such as a commercial mortgage is arranged.
They are most commonly used in property transactions but can also support businesses that need immediate funds.
How do bridging loans work?
You agree the loan amount and term with a lender.
Security is usually required against property or other assets.
Funds are released quickly, often within days.
You repay in full once you sell your property, refinance, or secure alternative funding.
Bridging loans charge interest monthly rather than annually, and can be structured as:
Rolled-up – interest added to the balance and paid at the end.
Retained – interest deducted upfront.
Serviced – interest paid monthly.
Types of bridging loans
Residential bridging loans
Ideal for purchasing or developing residential property. For instance, you might need a bridging loan for house purchase to secure your next home before selling your current one.
Commercial bridging loans
Used for buying, refurbishing, or refinancing commercial properties—like shops, offices, or other commercial real estate. These can also be referred to as commercial bridge loans and can support larger-scale projects or expansions.
Auction finance
Fast bridging loans can be especially beneficial for auctions, where property purchases need to be completed quickly, often before other funding becomes available.
Development finance
Ideal for property development or refurbishment projects. A bridging loan for property development can be used to buy land or cover building costs until you can secure a more permanent financial arrangement.
Open vs. closed bridging loans
Open bridging loans have no set repayment date but typically must be repaid within a specified period (often 12 months). Closed bridging loans have a fixed repayment date, making them more predictable if you know when your funds will be available.
First vs. second charge bridging loans
A 2nd charge bridging loan is secured on a property that already has a loan or mortgage against it. If there’s no other finance secured on the property, it’s typically referred to as a first charge bridging loan.
Fixed vs. variable bridging loans
A bridging loan interest rate can be fixed, guaranteeing predictable monthly repayments, or variable, where rates may change over time. It’s important to check the bridging loan interest rate carefully to understand total costs.
IPO bridging loans
A much less popular option, this is used to cover the expenses of taking a company public until Initial Public Offering (IPO proceeds) become available.
Refurbishing a property you currently own
Bridging loans can be used to release equity from a property before securing funds on a higher valuation with a commercial mortgage.
Pros and cons of bridging loans
Here's what to consider:
Pros | Cons |
Fast access to large sums of money | Higher interest rates than long-term loans |
Flexible repayment options (rolled-up, retained, serviced) | Requires security, usually property |
Can be used for business or property purposes | Fees can include arrangement, valuation, and legal costs |
Useful in time-sensitive property deals | Risk of repossession if you cannot repay |
Eligibility criteria
Lenders will usually assess:
Property or asset value – bridging loans are almost always secured.
Exit strategy – how you plan to repay (sale, refinance, or other funding).
Credit profile – while flexible, poor credit may affect rates. See bad credit business loans.
Business profile – trading history and financial stability.
Example scenarios
Investor – uses a bridging loan to buy an auction property, then refinances with a commercial mortgage.
Developer – funds refurbishment costs before selling or refinancing.
Business owner – covers short-term working capital while waiting for invoice payments.
What can I use a bridging loan for?
Chain break
Bridging loans are a suitable form of funding for several specific circumstances, including preventing or resolving a chain break
Renovations
Bridging loans can be used to renovate an existing property to increase the rental value, buy land to develop on, or to convert or extend your commercial premises
Buying property
Purchasing land or property at auction, building a new property with the intention of closing a sale on the completed project within the next year or two, and investing in a property portfolio are all ways bridging loans are used
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Learn more about bridging loans
How quickly can I get a bridging loan?
Funding can be arranged in a matter of days, depending on lender requirements and valuation times.
What can I use as security?
Most bridging loans are secured against residential or commercial property, but other assets may be accepted.
How much can I borrow?
Typical loans range from £25,000 to several million pounds, depending on property value and exit strategy.
What is an exit strategy?
This is how you plan to repay – usually through property sale, refinance into a commercial mortgage, or other long-term finance.
Can businesses use bridging loans?
Yes – companies often use them for working capital, tax bills or cash flow gaps.
Estimate your costs today
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Want to understand the cost of your loan?
Use our business loan calculator below to find out how much you can borrow to take your business to the next level.
Calculations are indicative only and intended as a guide only. The figures calculated are not a statement of the actual repayments that will be charged on any actual loan and do not constitute a loan offer.
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Representative example*
• 9.7% APR Representative based on a loan of £50,000 repayable over 24 months.
• Monthly repayment of £2,291.56. The total amount payable is £54,997.44
*Some lenders may apply fees during the application process, please note that these are set and provided by these entities.
Annual Percentage Rates
Rates from 8.2% APR
Repayment period
1 month to 30 years terms
Short-term lending can lead to financial difficulty and is not suitable for everyone. Contact us for support if you ever face difficulties making your repayments. Warning: Late repayment can cause you serious money problems. For help go to moneyhelper.org.uk
Please note that the information above is not intended to be financial advice. You should seek independent financial advice before making any decisions about your financial future.
It’s important to remember that all loans and credit agreements come with risks. These risks include non-payment and late-payment of the agreed repayment plan, which could affect your business credit score and impact your ability to find future funding. Always read the terms and conditions of every loan or credit agreement before you proceed. Contact us for support if you ever face difficulties making your repayments.
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Vivek Seda
Business Finance Manager
Vivek is the Asset Based Lending Manager at Funding Options by Tide. Vivek has been in the industry for over 10 years, working for both lenders and brokers. His product specialisms cover Asset Finance, Invoice Finance, Property Finance and structured transactions.