It can be a complicated process and can fall down for many reasons (Image: Lacheev via Getty Images)
For homeowners caught in a stalled property chain or facing a seller’s tight completion deadline, experts told Newspage a little-known loan could get your dream home over the line. However, it’s essential to understand the costs, terms and conditions before taking out a bridging loan.
Used in the right circumstances, with a realistic repayment plan and a clear financial benefit, it could be the difference between losing your dream home and finally getting the keys. A bridging loan can help borrowers fund renovations and help secure purchases that might otherwise be out of reach, according to one expert.
Tony Sanchez, founder of Bridging Loan Directory, said: “Calling bridging finance an expensive last resort overlooks why someone might use it. It can help secure a purchase or fund work that makes a property suitable for a mortgage. The useful question is whether the total cost makes sense for what the borrower needs to achieve.
“But getting the money is only half the job. There needs to be a realistic repayment plan from the outset. We should judge these loans by the whole outcome: what they enabled, what they cost and whether the borrower repaid them as intended.”
Weigh up costs of a bridging loan
Borrowers must weigh up the costs carefully and have a clear exit strategy before considering a bridging loan.
Getting the keys is a real achievement (Image: Lacheev via Getty Images)
Nouran Moustafa, practice principal and Independent Financial Adviser at Roxton Wealth, said: “Bridging finance has an unfair reputation for being a last resort. Sometimes it’s precisely what makes a property transaction possible.
“Imagine securing a property significantly below market value because the seller needs completion within weeks. A traditional mortgage might take too long, while bridging could secure the purchase. But the numbers must work. A £200,000 bridge at 0.75% monthly interest costs £1,500 per month before fees.
“Over six months, that’s £9,000 in interest alone, assuming the full balance remains outstanding. The biggest misconception is that bridging is inherently bad. It isn’t. Borrowing without a credible repayment strategy is.
“I would discourage bridging where a conventional mortgage, further advance or other suitable funding could achieve the same outcome at lower cost. My rule is simple: bridging should solve a temporary problem, not create a permanent financial one. A successful bridge isn’t one that completes quickly. It’s one that exits successfully.”
Cost that should always be considered
Homebuyers in England face a cost beyond the lender’s interest and fees, which should always be taken into consideration.
Harvey Dhillon, founder and CEO at Zmartly, said: “The idea that bridging is only a last resort for people in trouble is misleading, but the worry about its cost still stands. Buying your next home before the old one sells can be a planned move, and a bridge is one way to pay for it. For a home buyer in England, though, the cost goes beyond the interest and fees.
“A bridge lets you buy before you sell, so you’ll still own the old home at the end of completion day. That means paying the extra stamp duty on the new home and your solicitor will usually send it to HMRC on the day you complete.
“You only get it back if the old home is sold within a time limit and you claim the refund in time. So it’s a mistake to price a bridge on the lender’s charges alone. Count the extra stamp duty as cash you’ll need on the day, and don’t complete until you know both deadlines.”
Judge on repayment, not speed
A bridging loan should be judged on how it’s repaid, not how fast it completes, according to Dariusz Karpowicz, director of Doncaster-based Albion Financial Advice.
He said: “Expensive does not mean desperate when you use bridging finance. New borrowers regularly underestimate the true price. Borrowing £200,000 at a monthly 0.75% rate racks up £9,000 in interest across six months, excluding arrangement fees.
“Property investors must factor this expense into their initial figures. When a vendor requires completion within weeks and accepts 20% under market value, your margin easily covers the finance. Unless you hold pure cash, bridging often remains your sole option. Pair the loan with a guaranteed exit strategy and it works brilliantly. Lack that exit, and you face the priciest accidental mortgage imaginable.”
One expert said the strongest bridging case started with a credible exit, not just an urgent deadline.
Tracey Dixon, buy-to-let mortgage specialist and owner of Cardiff-based Pure Mortgage and Protection, said: “A bridging loan should buy you time, not buy you a bigger problem. Bridging can be a useful tool when a property needs work before it qualifies for a standard mortgage, or a purchase must complete before sale proceeds become available. Calling it an expensive last resort overlooks situations where it serves a clear purpose. But completing the purchase is only half the story.
“The real test is whether the borrower can repay the bridge, on time, at an acceptable overall cost. ‘We’ll refinance later’ needs evidence behind it: lender criteria, affordability and a realistic valuation. Interest, fees and the cost of delays all need to be included. If a standard mortgage or a negotiated extension can achieve the same outcome more cheaply, those options deserve serious consideration. The strongest bridging case starts with a credible exit, not just an urgent deadline.”
