Bridging Loans

Short-term property finance when timing matters

A bridging loan is a short-term finance option designed to help “bridge the gap” between one property transaction and another. It can be useful where funds are needed quickly, where a sale has not yet completed, or where a property needs work before it can be refinanced or sold.

At Henden Financial Limited, we help clients understand whether bridging finance is suitable, how much it may cost, and what the realistic exit route would be before any recommendation is made.

Bridging finance is not suitable for everyone. It is usually more expensive than a standard mortgage and is designed to be repaid over a short period. The most important part of any bridging loan is having a clear, credible exit strategy.

Your property may be repossessed if you do not keep up repayments on your mortgage.

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Bridging Loan FAQ

When might a bridging loan be useful?

Bridging finance may be considered for situations such as:

buying a new property before your current property has sold;
purchasing at auction where completion timescales are tight;
funding light refurbishment or property improvements;
buying a property that is not currently mortgageable;
refinancing an existing short-term loan;
releasing short-term capital secured against property;
supporting a chain-break situation;
bridging the gap while waiting for a longer-term mortgage, sale proceeds or other finance to complete.

Each case is different. We will review your circumstances, the property, the borrowing requirement, the timescale and your exit strategy before discussing suitable options.

How do bridging loans work?

A bridging loan is usually secured against property and arranged for a short period, often until the property is sold, refinanced or another agreed source of repayment becomes available.

The lender will typically assess:

the property being used as security;
the loan amount required;
the loan-to-value;
the purpose of the borrowing;
your income and overall circumstances where relevant;
your credit profile;
the proposed repayment route;
the likely timescale for repayment;
whether the loan is regulated or unregulated.

Interest may be paid monthly, retained from the loan at the start, or rolled up and paid when the loan is repaid, depending on the lender and product selected.

Why does the exit strategy matter?

The exit strategy is the planned method for repaying the bridging loan.

Common exit strategies include:

sale of the property;
refinance onto a standard residential mortgage;
refinance onto a buy-to-let mortgage;
refinance onto a commercial mortgage;
repayment from confirmed funds due from another transaction;
repayment from development or refurbishment completion funding.

A bridging loan should not be taken out unless the repayment route is realistic, evidenced where needed, and affordable where the lender requires affordability checks.

What are the main risks?

Bridging finance can be a useful tool, but it carries important risks.

Because it is short-term borrowing, costs can be higher than a normal mortgage. If the exit strategy is delayed or fails, the loan may become more expensive and the lender may charge additional fees or default interest.

As the loan is secured against property, failure to repay could ultimately result in the property being repossessed.

We will help you understand the costs, risks and alternatives before you make a decision.

What costs are involved?

The total cost of bridging finance may include:

interest;
lender arrangement fees;
valuation fees;
legal fees;
broker fees;
exit fees where applicable;
administration fees;
telegraphic transfer fees;
potential extension or default charges if the loan is not repaid on time.

We will explain the costs clearly and help you compare the overall structure, not just the headline interest rate.

Why Choose Us?

There are many considerations when choosing someone to help you with your first mortgage. Getting it right could save you thousands. During our initial consultation we will go through the process together and assess your suitability. We offer a comprehensive range of products from across the market, which means we aren't limited to a smaller selection of products and can choose from thousands of available lenders.

20 Years Experience

Our wealth of experience across the industry means our knowledgeable advisors can provide a high level service.

No Offer, No Fee

We are so confident that we will find you the right mortgage, that we only ever charge when you receive a full mortgage offer. For most people this takes them forward to a successful house purchase.

Comprehensive Market Access

You won't be missing out on any great deals. We can access all of the mortgage products which are currently available and know how to find you the most suitable deal.