Introduction to Bridging loans
Bridging loans are a key solution for UK clients needing fast property finance. In 2026, the UK property market presents unique challenges, making bridging loans more essential than ever for fast, flexible finance.
With increased competition for desirable properties, tighter transaction deadlines, and a growing number of properties deemed un-mortgageable by high-street banks, bridging loans offer a vital route to secure funding quickly.
Whether you’re facing a broken property chain or need to complete an auction purchase within 28 days and need quick bridging finance. Perhaps you have completed a development and need development exit finance bridge or want to refurbish a property that traditional lenders won’t touch, bridging loans provide the speed and flexibility that the current market demands.
Quick Summary: Bridging Loans in 2026
What is a bridging loan?
A bridging loan is a short-term loan used to help bridge the gap when buying something while waiting for funds from another sale. Typically, bridging loans last up to 12 months (regulated) or up to 24 months (unregulated) and are used to bridge the gap between transactions.
How do bridging loans work?
Bridging loans are secured against property or land and are designed for short-term use. You must provide a clear exit strategy such as selling a property or refinancing to repay the loan.
Who can use a bridging loan?
Homeowners, landlords, property developers, and business owners can use bridging loans for purposes like buying before selling, auction purchases, refurbishments, and development exit finance.
What are typical costs?
Bridging loans carry higher interest rates and fees compared to traditional mortgages, with rates typically ranging from 0.5% to 1.5% per month. Additional costs may include arrangement fees, valuation fees, and legal fees.
What are the risks?
Bridging loans are considered an expensive, high-risk form of borrowing. If you cannot repay on time, your property is at risk. The overall cost can be high due to monthly interest and fees.
How do I apply?
You’ll need to provide details of the property, your exit strategy, and proof of income. Most lenders require evidence of how you’ll repay the loan. Working with a broker can help you access the best rates and streamline the process.
Who this guide is for
Homeowners needing to break a chain, landlords refurbishing property and businesses needing to complete on a commercial property purchase quickly.
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What is a bridging loan?
A bridging loan is exactly what the name suggests: finance that bridges the gap between needing to complete a property purchase and having permanent funds in place. Perhaps you’ve found your dream home but your current property hasn’t yet sold, or you’ve won a lot at auction and need to complete within weeks rather than months. Bridging finance provides the short-term capital to make these transactions happen.
Unlike a standard mortgage, bridging loans are always secured on property or land and are designed purely as short-term solutions. They are not intended for long-term borrowing—the expectation from day one is that you will repay the loan within an agreed timeframe, either through selling a property, refinancing onto a traditional mortgage, or receiving other funds such as a pending inheritance.
In 2026, typical term ranges are:
- Regulated bridging loans (for owner-occupied homes): usually up to 12 months maximum
- Unregulated bridging loans (for investment or commercial property): often up to 18–24 months
Interest is normally charged monthly rather than annually, and can be structured in different ways—rolled up into the loan, retained from the advance, or serviced with monthly repayments depending on your preference and circumstances.
The key to any successful bridging loan is the exit strategy. Every bridging lender will want to understand exactly how and when you intend to repay. Whether that’s through a confirmed property sale, an agreed remortgage, or other verifiable source of funds, the strength of your exit determines both approval and pricing.
Now that you understand the basics, let’s explore the different ways bridging loans can be used in 2026.
What can a bridging loan be used for in 2026?
Common Uses
Bridging lenders in the current market are comfortable with a wide range of legal purposes, provided there is a clear and realistic exit. The flexibility of bridging finance means it can solve problems that conventional lending simply cannot address within the required timeframe.
- Breaking a property chain
- Downsizing or upsizing
- Auction purchases
- Refurbishing unmortgageable property
- Development exit finance
- Capital raising for tax bills or business use
- Probate and inheritance
- Separating assets on divorce
It’s important to understand that the regulatory status of your loan depends on how the property will be used. If you (or an immediate family member) will live in the property, the loan is typically a regulated bridging loan, subject to Financial Conduct Authority rules. If the property is purely for investment purposes such as a buy to let, HMO, or commercial premises the loan is usually an unregulated bridging loan with different lender requirements.
Here at Fox Davidson, we regularly arrange bridging on a variety of property types including standard residential property, HMOs, MUFBs (multi-unit freehold blocks), student accommodation, semi-commercial buildings such as shops with flats above, and full commercial property including offices and retail units.
With these uses in mind, let’s look at the different types of bridging loans available and how they work.
Types of bridging loan
When considering bridging finance, you’ll encounter several different classifications. Understanding these distinctions helps you identify the right structure for your circumstances and ensures you’re comparing like with like when you compare bridging loans from different providers.
The main factors to consider are:
- Regulation: Is this a regulated or unregulated loan?
- Timing: Is this an open or closed bridge?
- Security position: Is this a first charge or second charge loan?
Regulated vs unregulated bridging loans
A regulated bridging loan is secured on a property where the borrower or their immediate family currently lives or intends to live. These loans fall under the supervision of the Financial Conduct Authority and come with additional consumer protections including mandatory advice, suitability assessments, and standardised disclosure documents.
Regulated bridging is typically used for:
- Chain breaks when buying your next home
- Downsizing in retirement
- Purchasing a new residence before your current home sells
- Self-build or major renovation projects where the finished property will be your main residence
An unregulated bridging loan is secured purely on investment or business property. This includes buy to let properties, HMOs, MUFBs, commercial premises, development sites, and any property owned through a limited company. Because these are business transactions rather than consumer lending, they fall outside FCA regulation.
Only FCA-authorised firms can arrange regulated bridging loans, which means there are fewer providers in this space. However, the consumer protections are considerably stronger. Here at Fox Davidson, we are authorised and regulated by the Financial Conduct Authority and arrange both regulated and unregulated bridging, matching the loan type to each client’s intended use of the property.
Open vs closed bridging loans
- Open Bridging Loans: Do not have a fixed repayment date. Suitable when the exact date of repayment is uncertain, but a clear exit strategy exists.
- Closed Bridging Loans: Have a fixed, contractually agreed repayment date. Used when there is certainty around the exit, such as an exchanged property sale with a known completion date.
In 2026, most bridging lenders price closed bridges slightly more competitively because the exit is more certain and the risk to the lender is lower. Many bridging lenders will expect regular updates on open bridging exits, such as marketing reports on property sales or progress on refinance applications.
Examples:
- Closed bridge: Homeowner with a property sale that has exchanged and a known completion date.
- Open bridge: Investor refurbishing a property with an exit via refinance, but no confirmed date.
First charge vs second charge bridging
- First Charge Bridging Loan: Secured against a property with no other loans. The lender has first claim on the property if sold or repossessed.
- Second Charge Bridging Loan: Secured against a property with existing loans (such as a mortgage). The lender’s claim is secondary to the first charge lender.
There are two main types of bridging loans: first charge and second charge. First charge loans typically allow higher loan-to-value ratios and lower rates, while second charge loans are used to raise capital without disturbing an existing mortgage, usually at slightly higher rates.
In 2026, most lenders will advance up to around 70–75% of the property’s value in total across all charges, though some will consider higher levels for strong cases with additional security or substantial retained interest.
With these types defined, let’s see how the bridging process works in practice.
How Fox Davidson bridging loans work in practice
Process Overview
Here at Fox Davidson, we structure bridging loans from £250,000 to £100m+ for property clients across the UK. Rather than working with a single bank, we access a panel of specialist bridging lenders, allowing us to tailor solutions for homeowners, investors, developers and business owners with very different requirements.
Our approach as a bridging loan broker is to understand your situation thoroughly before recommending a facility. We’ll discuss the property, your timescales, your exit strategy, and any complexities that might affect lender appetite. This allows us to identify the most suitable lenders and negotiate terms that work for your specific circumstances.
The bridging process with Fox Davidson typically follows these steps:
- Initial conversation – requirements, property, exit strategy
- Decision in principle – indicative terms from lenders
- Document collection – gather required information
- Valuation – independent surveyor values the property
- Formal offer – lender issues binding loan terms
- Legal work – solicitors complete due diligence
- Drawdown – funds released, transaction completes
Throughout the whole process, we coordinate between lenders, valuers and solicitors to keep transactions on track. This is particularly important for time-sensitive deals such as auction purchases where the 28-day deadline is immovable.
How much can I borrow with a bridging loan?
Through Fox Davidson, typical bridging loan sizes in 2026 range from £250,000 to £100m+ on residential and commercial property across the UK. The amount you can borrow depends primarily on the value of the property being used as security and the strength of your exit strategy.
Unlike traditional mortgages, where affordability is calculated based on income, bridging loans are asset-backed. Maximum borrowing is usually expressed as a loan to value (LTV) percentage. In the current market, typical LTV caps are:
Property Type | Typical Maximum LTV | Notes |
|---|---|---|
Standard residential (first charge) | 70–75% | Higher with retained interest |
Buy to let / HMO | 70–75% | Depends on exit route |
Commercial property | 65–70% | Varies by asset quality |
Development sites | 60–70% | Based on current value |
Second charge bridging | 70–75% combined | Requires first charge consent |
Example borrowing scenarios:
Property Value | Maximum LTV | Approximate Maximum Loan |
|---|---|---|
£400,000 | 75% | £300,000 |
£750,000 | 75% | £562,500 |
£1,500,000 | 70% | £1,050,000 |
£5,000,000 | 70% | £3,500,000 |
More complex structures are common, for example, using more than one security property to raise the required funds, or combining a first charge on one property with a second charge on another. Exact amounts depend on property type, location, the credibility of your exit strategy, and your overall borrower profile.
What are bridging loan rates and costs in 2026?
Bridging loans are priced monthly rather than annually, reflecting their short term nature. They are more expensive than long-term mortgages because they offer speed, flexibility, and access to finance in circumstances where standard lenders cannot help.
In 2026, realistic market interest rates for bridging finance are:
- Prime residential security (first charge): 0.55%–0.85% per month
- Standard investment property: 0.65%–1.0% per month
- Heavier refurbishment or complex commercial: 0.85%–1.25% per month
- Second charge bridging: typically 0.1%–0.3% per month higher than equivalent first charge
Interest can be structured in three ways:
- Rolled-up interest – interest accrues and is added to the loan balance, repaid in full at the end
- Retained interest – interest for the agreed term is deducted from the advance upfront and held by the lender
- Serviced interest – you make monthly payments throughout the term
Beyond interest, you should budget for several additional costs:
- Arrangement fee: 1%–2% of the loan amount
- Broker fee: often structured fee-free (paid by lender)
- Valuation fee: varies by property value and complexity
- Legal fees: for both your solicitor and the lender’s legal work
- Exit fee: charged by some (not all) lenders on repayment
Example bridging loan cost breakdown:
Element | Example Figures |
|---|---|
Loan amount | £500,000 |
Term | 9 months |
Interest rate | 0.75% per month |
Monthly interest cost | £3,750 |
Total interest (9 months) | £33,750 |
Arrangement fee (1.5%) | £7,500 |
Valuation fee | £1,500 |
Legal fees (estimate) | £3,000 |
Total estimated cost | £45,750 |
One advantage of bridging is that if you repay early, you typically only pay interest for the months used though some lenders impose a minimum term (often 1–3 months) that we will always explain clearly before you commit.
Bridging loans for different types of property
- Owner-occupied homes (regulated bridging)
- Standard buy to let (houses/flats)
- HMOs and MUFBs (multi-let properties)
- Student accommodation
- Semi-commercial (shops with residential above)
- Full commercial (offices, retail, industrial)
- Development sites (land with or without planning)
Properties considered “unmortgageable” by high-street banks are often perfectly acceptable to bridging lenders. This includes properties without kitchens or bathrooms, those with structural issues, short-lease flats, and buildings in need of change of use. The key is demonstrating a clear path to either sale or refinance once the issues are resolved.
Example 1: Investor purchases a tired Victorian terrace in Bristol to convert into a six-bed HMO. Needs new bathrooms, fire alarm, licensing. Arranged unregulated bridge at 70% LTV, works completed in four months, exited onto HMO buy to let mortgage.
Example 2: Developer acquires a small block of eight student flats in Leeds. Vendor needs quick sale, block requires modernisation. Structured 12-month bridge with staged drawdowns for refurbishment, exited by refinancing onto a commercial mortgage.
Regulated bridging for homeowners in 2026
Common homeowner scenarios:
- Buying before selling
- Downsizing in later life
- New-build or self-build
- Preventing chain collapse
Regulated bridging terms usually run up to 12 months maximum, and lenders will carefully assess both the strength of your exit and your ability to service or sustain the borrowing during the term. Consumer protections include mandatory advice requirements, formal suitability assessments, and standardised disclosure of all costs and risks.
Example scenario:
A couple in the South West own their family home worth £900,000 with a £200,000 existing mortgage. They’ve found a bungalow for £650,000 but their sale is delayed. Arranged a regulated bridging loan of £450,000 secured as a first charge on their current home, enabling them to purchase the bungalow. When their house sells, the bridge is repaid and they receive the remaining equity.
Let’s move on to unregulated bridging for investors, developers, and businesses.
Unregulated bridging for investors, developers and businesses
Main uses:
- Investment purchases and refinances
- Refurbishment and change of use
- Development exit finance
Lending decisions for unregulated bridging are driven primarily by asset quality, location, the borrower’s experience, and the strength of the exit strategy—rather than personal income alone. Credit history matters but is often secondary to these factors.
Fox Davidson arrange complex structures including bridge-to-let facilities and staged drawdowns for refurbishment or development costs.
Example:
Developer completes a block of 12 new-build flats in Manchester. Six units sold, six remain. Arranged a £3m unregulated bridge secured against unsold units, repaying the development lender. Developer has 18 months to sell remaining flats at optimal prices.
Now, let’s review the key criteria for qualifying for a bridging loan.
How do I qualify? Basic bridging loan criteria
Key Criteria
Bridging lenders in 2026 are generally more flexible than high-street banks, but they still require key fundamentals to be in place before they’ll advance funds.
- Acceptable UK property security
- Realistic and evidenced exit strategy
- Sufficient equity or deposit (typically 25–35% equity, max 65–75% LTV)
- Credible borrower profile
Income and credit history are still relevant but are often secondary to the strength of the security and exit. Many bridging lenders will consider applications from borrowers with bad credit if the current position is stable and the exit is robust. Company structures are common for investors, and consolidating existing borrowing is possible in some circumstances.
The step-by-step bridging process with Fox Davidson
Here at Fox Davidson, we handle the bridging process end-to-end, coordinating with valuers, solicitors and lenders to keep your transaction on track. Our role is to make what can be a complex journey as straightforward as possible.
Stage 1: Initial enquiry and discovery call
Stage 2: Indicative terms / decision in principle
Stage 3: Document collection
Stage 4: Valuation
Stage 5: Formal offer
Stage 6: Legal work and completion
Stage 7: Drawdown
Typical timelines in 2026:
- Straightforward cases: 7–14 working days
- More complex transactions: 3–6 weeks
- Auction purchases: completed within 28 days
Bridging vs alternatives: which is right for you?
Bridging is one of several possible routes to secure finance, and we will always highlight alternatives where they may be more suitable or cost-effective. Our job is to find the right solution, not simply to arrange a bridging loan.
Main alternatives:
- Standard remortgage
- Further advance from current lender
- Secured loan / second charge term loan
- Unsecured business borrowing
Comparison table:
Factor | Bridging Loan | Remortgage | Second Charge Term Loan |
|---|---|---|---|
Speed to completion | 1–4 weeks | 4–8 weeks | 3–6 weeks |
Typical term | 3–24 months | 2–35 years | 3–25 years |
Interest rate | 0.55%–1.25% monthly | 4%–6% annually | 6%–12% annually |
Best suited for | Time-critical, short-term needs | Long-term refinancing | Medium-term capital raising |
Property condition | Flexible | Must be mortgageable | Must be mortgageable |
Bridging excels where speed, property condition, or temporary circumstances make standard mortgage underwriting difficult or impossible within your timeframe. However, we will never recommend a bridging loan where a simpler, cheaper solution will achieve your objectives.
Risks and how to manage them
- Higher cost than long-term mortgages
- Short-term pressure to execute exit
- Property at risk if loan cannot be repaid
- Exit failure (sale falls through, refinance not approved)
- Delays in property sale or market value drops
- Cost overruns on renovation or development
How to mitigate these risks:
- Use conservative LTVs
- Build in realistic timeframes
- Obtain professional valuations
- Instruct experienced solicitors
- Plan contingencies and backup strategies
- Review progress regularly
We strongly encourage clients to speak to us early so we can stress-test exit strategies before any commitments are made.
Case study examples (2024–2026 market)
Case study 1: Downsizing couple (regulated bridging, 2025)
Situation: Couple in Somerset downsizing from £850,000 home to £525,000 bungalow. House not yet sold, vendor won’t wait.
Solution: Regulated bridging loan of £380,000, first charge, 0.69% per month, interest retained for six months.
Outcome: House sold in four months, bridge repaid, no early repayment charges.
Case study 2: HMO purchase (unregulated bridging, 2024)
Situation: Limited company client buying five-bed Victorian terrace in Bristol for HMO conversion. Needs works, not mortgageable.
Solution: Unregulated first charge bridging loan of £295,000 at 0.79% per month, plus £35,000 refurbishment facility.
Outcome: Works completed, HMO licence granted, exited onto specialist HMO mortgage.
Case study 3: Development exit (unregulated bridging, 2026)
Situation: Developer completed 10 new-build apartments in Greater Manchester. Four sold, six remain, development lender won’t extend.
Solution: £2.8m unregulated bridging loan, secured against unsold units at 0.85% per month, 18-month term.
Outcome: Five units sold in 10 months, final unit in month 14, bridge repaid, developer retained more profit.
Frequently Asked Questions about bridging loans (2026)
Straightforward bridging loans typically complete in 7–14 working days from application. More complex transactions may take 3–6 weeks. Auction purchase deadlines of 28 days are routinely achievable.
Both options exist. You can service the interest monthly, have interest retained from the advance, or roll interest up to be repaid with the capital at the end.
Yes, in many cases. Bridging lenders focus primarily on the security property and exit strategy rather than credit score alone.
Regulated bridging loans typically have a maximum term of 12 months. Unregulated loans can extend to 18–24 months.
Bridging loans are a legitimate and widely-used form of finance, but they do carry risks. The property used as security is at risk if you cannot repay, and the costs are higher than long-term borrowing.
Absolutely. Auction finance is one of the most common uses for bridging. Most auction houses require completion within 28 days, far too fast for a standard mortgage.
There’s no fixed minimum credit score. Bridging lenders assess applications holistically, weighing the property value, your equity, and the strength of your exit strategy.
Yes. Many property investors and developers use limited companies (including SPVs) for tax efficiency and liability reasons.
Most bridging lenders require 25–35% equity in the property, meaning they’ll advance 65–75% of the value.
If your exit is delayed, most lenders will consider an extension—though this typically incurs additional fees and continued interest. If you cannot repay at all, the lender can take possession of the secured property.
While you can approach some lenders directly, using a specialist broker like Fox Davidson offers significant advantages, including access to the whole market, negotiation, and process management.
Typical fees include an arrangement fee (1–2% of the loan), valuation costs, legal fees, and potentially a broker fee. Some lenders also charge exit fees.
How Fox Davidson can help you with a bridging loan
Here at Fox Davidson, we’re award-winning UK residential mortgage and bridging specialists with extensive experience structuring loans from £250,000 to over £100m. Whether you’re a homeowner needing to break a chain, a landlord expanding your portfolio, or a developer requiring exit finance, we offer the same personalised, expert service.
Our approach gives you access to the whole bridging market including specialist lenders who don’t deal directly with the public rather than being limited to a single bank’s products. We handle straightforward residential bridges and highly complex commercial transactions with equal attention to detail, always focusing on finding the right solution rather than simply the fastest completion.
Before you commit to any bridging facility, we’ll talk you through the suitability, costs, risks and alternatives. If a remortgage, further advance, or other finance options would better serve your needs, we’ll tell you. Our role is to provide genuinely independent advice that puts your interests first.
If you’re considering bridging finance for your next property move, we’d welcome the chance to discuss your plans. Contact us for a no-obligation conversation, share your property details, timescales and exit strategy so we can respond quickly with realistic options and indicative terms.
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