Bridging Finance

Bridge a financial gap to secure an investment property, complete refurbishments and more.

What is Bridging Finance?

A bridging loan is a form of short-term finance secured on a property that can help to bridge a financial gap.

Unlike typical mortgages, bridging loans don’t always depend on income or credit history and they can be arranged quickly if speed is important – often within a few weeks and sometimes in as little as a few days. A bridging loan is designed to be arranged much quicker than a standard mortgage and usually credit-backed terms can be produced within 4–5 hours. As the interest is usually retained or rolled, there is no need to review affordability evidence or to calculate an affordability assessment for monthly payments. In many scenarios a desktop valuation can be used instead of a physical valuation – these aspects enable lenders to underwrite quickly and allow them to instruct solicitors very early on in the transaction.

Bridging Loans can be used for a variety of reasons, such as purchasing an investment property, waiting for planning approval, carrying out refurbishments or refinancing an existing development facility.

A bridging loan usually has a maximum LTV of 75%, which means a customer must be looking to borrow less than 75% of their property’s value. To increase borrowing, a borrower may be able to use the equity they have in other assets to offer additional security. Using multiple properties as security can enable borrowing of up to 100% of a property’s value.

The average term for a bridging loan is approximately 10 months, although some lenders offer longer terms depending on the borrower’s circumstances.

Bridging loans can be defined as open or closed. The majority of bridging loans are on an open basis, where the borrower sets out a proposed exit plan to repay their loan but there is no definite date. An open bridge loan can be repaid whenever funds become available. However, there will be a clear cut-off point by which the loan has to be repaid, for example within 12 months.

How does the process work?

Start Your Application

Getting started is easy. You can either:

Use our online application tool to submit key details and supporting documents about your project and funding needs.
Or, if you prefer a personal approach, schedule a call with one of our finance specialists to discuss your requirements.

Expert Consultation

Once we receive your application, one of our experienced brokers will review your project details, including:

The type and scale of the development
Estimated costs and project timeline
Your financial position and experience level
Any planning permissions or land ownership details

This allows us to assess the best funding options for you and ensure we align you with the right lender.

Lender Matching & Funding Terms

We have whole-market access, with access to a panel of over 80 lenders, from high-street banks to private and specialist development finance providers. Based on your project’s needs, we will:

Present you with the most suitable loan options, including interest rates, loan terms, and repayment structures.
Negotiate on your behalf to secure the most competitive terms available.

Application Submission & Approval

Once you’ve selected your preferred lender, we guide you through the formal application process, helping with:

Gathering necessary documentation (development appraisals, cost breakdowns, valuations, etc.) in our borrower portal.
Liaising with lenders to ensure a smooth underwriting process.
Addressing any queries to keep things moving quickly.

Funding Release & Project Support

Once your finance is approved, the funds are typically released in stages (drawdowns) to match your development milestones. We continue to provide guidance throughout the process, ensuring any additional funding requirements are handled efficiently.

Representative example:

Based on interest only bridging loan. If you borrow £100,000 over 1 year at a rate of 0.6% pcm, you will be charged £600 per month. This is rolled into the loan and retained, with a total amount payable of £109,200 at the end of the term. This includes repayment of the net loan, interest of £7,200, and an arrangement fee of £2,000. The overall cost for comparison is 9.20% APR. Some lenders may also charge an exit fee.

Definitions:

Net Loan

The amount a borrower receives after deducting any fees, interest, or deductions from the gross loan.

Gross Loan

The total loan amount approved by the lender before any deductions, including interest, fees, and retained payments.

Interest Rate

The percentage charged by a lender on the loan amount, typically expressed as an annual percentage.

Arrangement Fee

A fee charged by the lender for setting up the loan, usually a percentage of the gross loan amount.

Procurement Fee

A fee paid by the lender to iBrokr for sourcing and arranging the loan on behalf of the borrower.

Exit Fee

A charge imposed by the lender when the loan is repaid, often calculated as a percentage of the loan amount.

Total Costs

The overall cost of borrowing, including all interest payments and associated fees.

Retained Interest

Interest that is deducted upfront from the loan amount to cover the agreed loan term, meaning no monthly payments are required.

Stepped Interest

A variable interest structure where the rate increases or decreases at predefined intervals during the loan term.

Floating Interest

An interest rate that fluctuates based on an external benchmark, such as the Bank of England base rate.

Purchase Price

The agreed amount paid by the borrower to acquire a property or development site.

Open Market Value (OMV)

The estimated price a property would achieve in an open and competitive market under normal conditions.

Gross Development Value (GDV)

The estimated total value of a property or development once it is completed and sold at market rates.

AVM Valuation

An Automated Valuation Model (AVM) valuation uses data and algorithms to estimate a property’s value without a physical inspection.

Desktop Valuation

A valuation carried out remotely using market data, comparables, and online tools, without an in-person site visit.

Red Book Valuation

A formal property valuation conducted by a RICS-registered valuer, following the RICS Valuation – Global Standards (Red Book) guidelines. It provides an independent, professional assessment of a property’s market value.

Decision-in-Principle (DIP)

A lender’s initial confirmation that they are willing to lend, subject to further due diligence and underwriting.

Equity Requirement

The amount of capital a borrower must contribute towards a project, typically expressed as a percentage of the total costs.