When would you use a bridging loan?

Bridging loans are a short-term form of lending and are usually arranged much quicker than a buy-to-let mortgage, with turnaround times commonly around 28 days; although, one of the lenders we work with has the capability to pay out funds on the day of application (under the right circumstances).

Bridging loans can be used for a variety of reasons, including to:

  • finance property purchase at auction
  • finance renovation work
  • purchase land for future development
  • purchase uninhabitable property
  • purchase stock
  • purchase machinery or IT equipment

Clients can typically borrow up to 75% loan-to-value on a regulated bridging loan and rates start from 0.49%.

Bridging loan rates vary, depending on factors such as the purpose of the loan and projected future rental income of the property (established by a valuer).

If the regulated bridging loan is to cover renovation work, then the lender might perceive heavier work (such as knocking down walls or building a conversion) to be a greater risk than a kitchen renovation. Therefore, the rate might be higher.