Bridging finance is secured debt. A missed exit can lead to default interest, extension costs or repossession. Some bridging is FCA regulated and some is not; establish the regulatory status and use an appropriately authorised adviser before paying a fee or signing an offer.
When a bridge may be considered
A broken property chain
Buying before an existing property sale completes, with sale proceeds intended to repay the bridge.
Auction or fixed completion
A purchase with a short contractual deadline, subject to legal, valuation and funding checks.
Property needing work
Funding purchase or refurbishment where the property does not yet meet a standard lender's security criteria.
Short timing mismatch
Temporary funding before a documented asset sale, longer-term finance or other credible repayment event.
A legitimate use does not make a bridge affordable or suitable. Compare with changing the transaction date, negotiating the chain, standard mortgage finance, a further advance or not proceeding.
Gross loan, net advance and amount repayable
The gross facility can be larger than the cash you receive. Retained interest, arrangement fees and other deductions can reduce the net advance, while interest and some fees can increase the redemption balance. Ask for a written illustration showing the net funds released and the amount due at the planned exit date, plus the cost if completion is delayed.
Bridging loan costs to compare
- Interest
- May be charged monthly and paid, retained from the advance, or added to the balance. Compare the actual amount repayable, not only a monthly headline rate.
- Arrangement fee
- Often calculated from the gross facility or loan. Confirm whether it is deducted from the money released or added to the balance.
- Valuation
- The lender may require a valuation appropriate to the property, condition, planned works and proposed exit.
- Legal costs
- The borrower can be required to pay its own and the lender's legal costs. Complex titles or security can increase them.
- Broker fee
- A broker may charge a fee and receive lender commission. Obtain the amount or calculation basis in writing.
- Exit or extension costs
- Some facilities have exit fees, default interest or extension charges. These matter if sale or refinance is delayed.
The exit strategy
A proposed sale needs realistic value, timing and marketability. A refinance exit needs evidence that the property, borrower, loan size and intended use can meet the future lender's criteria. An agreement in principle is not a guaranteed refinance offer. The FCA's responsible-lending rules specifically warn against relying only on an expectation that a borrower's credit status will improve enough to refinance.
Stress the plan before borrowing
- What if the sale price is lower or the buyer withdraws?
- What if building work costs more or takes longer?
- What if the intended mortgage lender changes criteria or value?
- How many months of interest and extension cost can the budget absorb?
- Which asset is at risk if the exit fails?
Regulated and unregulated bridging
Regulatory status depends on the borrower, security, occupancy, purpose and transaction structure. A bridge involving a home occupied or intended for occupation by the borrower or a close relative can fall within mortgage regulation. Some business, investment and buy-to-let borrowing can sit outside those protections. Do not rely on a marketing label: ask the adviser to confirm the status and why it applies.
Primary sources and checks
Request a bridging finance broker match
Describe the property, purpose, timing and intended exit. An introduction depends on partner fit and availability.
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