Bridging Loan to Buy a House
Funding from £75,000 up to £25 million
Helping you secure a short-term financial solution to your specific house bridging loan requirements
Bridging Loan to Buy a House
A bridging loan is a form of short-term financing designed to provide rapid access to substantial funds, typically used to “bridge the gap” between the purchase of an asset and the availability of long-term financing.
For instance, a bridging loan to buy a house may be required when purchasing a property at auction, where payment is generally due within 28 days (or 56 days under the modern method of auction), but the arrangement of a mortgage cannot be completed within that timeframe. Another common scenario arises when the sale of an existing property falls through, yet the buyer must still complete the purchase of a new property to avoid losing it.
Bridging loans are most commonly secured against residential or commercial property, though in certain circumstances, other high-value assets may be used as collateral.
It is important to note that while bridging loans to buy a house can be arranged quickly and often permit early repayment without penalties, they represent a relatively expensive form of borrowing if held over the long term. As such, they are generally suited to short-term financial requirements where speed and flexibility are paramount.
Types of UK bridging loan clients:
Homeowners
Commercial & Residential Landlords
Buy to Let Investors
Business Owners
Property Developers
Company CEO’s
Bridging Loan to Buy a House
How a Bridging Loan Works
You want to buy a new house but haven’t yet sold your current property.
You take out a bridging loan secured against:
The house you’re buying,
The house you currently own, or
Both (depending on the lender and your equity).
Once you sell your old property or secure a mortgage, you repay the bridging loan, usually within 12 months.
Types of Bridging Loans to Buy a House
Type: Closed bridging loan
When It’s Used: You have a clear repayment date, e.g., you’re under contract to sell your old home on a specific date.
Key Feature: Lower risk → lower interest rate.
Type: Open bridging loan
When It’s Used: You don’t know exactly when repayment will happen, e.g., your house is for sale but no buyer yet.
Key Feature: Higher risk → higher interest rate.
Pros & Cons – Advantages
Lets you buy quickly, avoiding losing a property to another buyer.
Flexible repayment options.
Can be used for auction purchases or renovations where a mortgage isn’t immediately possible.
Disadvantages
Very expensive if held long-term.
Risky if your old property doesn’t sell or financing falls through.
Some lenders charge hefty penalties for early repayment.
Alternatives
Chain-breaking mortgage: Some lenders offer temporary mortgage products instead of bridging finance.
Let-to-buy mortgage: Rent out your current home and take a mortgage on the new one.
Deposit loan or family gift: Cheaper than bridging finance if available.
Example Scenario
Your dream house costs £400,000.
You own a current home worth £300,000, but it hasn’t sold yet.
You take a bridging loan of £300,000 to buy the new house.
A few months later, you sell your old house and repay the bridging loan plus interest and fees.