The Basics of Bridging Finance

What is Bridging Finance?

Bridging loans, also known as bridging finance or short-term property loans, are a key solution for individuals and businesses who cannot secure traditional bank finance quickly enough to seize a property opportunity. Bridging loans are designed for speed and flexibility, enabling swift access to funds for residential bridge loans, commercial property bridging, auction purchases, refurbishment loans, and development finance.

The UK bridging loan market has evolved significantly over the last 60 years. With over £7.34 billion lent through bridging finance in 2024, with this figure expected to rise to nearly £9.46 billion in 2025. As bridging finance has grown, so too has the diversity of uses and specialist products on offer.

When is a Bridging Loan Used?

Bridging loans are typically used when time is of the essence or when a unique opportunity exists that mainstream banks cannot service quickly or flexibly. Common use cases include: 

• Auction finance: Securing property quickly in competitive bidding environments 

• Residential or commercial property purchases: Acting fast when traditional mortgage finance is unavailable 

• Refurbishment finance: Funding upgrades or conversions to increase property value 

• Development finance: Providing capital for ground-up construction or property conversion 

• Below Market Value (BMV) purchases: Purchasing property at a discount, where the lender advances against the open market value, often resulting in high loan-to-purchase price ratios 

-At Cotswold & Country Ltd, we offer solutions that support a wide range of scenarios. For example, for BMV transactions, where certain lenders will permit you to lend against the market value instead of the purchase price, which can help fund more of the purchase price than otherwise possible, provided the loan-to-value (LTV) criteria are met. 

Bridging loans are also well-suited for unique circumstances such as distressed sales, probate sales, inter-family transfers, or vendor-assisted transactions, including situations where a vendor provides a loan to the buyer to facilitate completion.

How Does Bridging Development Finance Work?

Development bridging finance is a specialist product for experienced property investors and developers. We typically require that applicants are property owners with a proven track record. Lending limits are assessed based on project details: up to 70% of the Gross Development Value (GDV) and 85% of the total cost. While these limits may restrict the total funding available, they help ensure sustainable lending and project viability.

If a project needs additional time to market or complete a sale after the development phase, we also provide development exit bridging loans, offering up to 75% LTV. This solution gives developers breathing room to maximise returns rather than facing pressured sales or refinancing elsewhere.

Why Should You Use a Broker for Bridging Loans?

Brokers specialising in bridging loans and property finance can add significant value. An experienced broker can compare bridging loan rates, assess lender criteria, and prepare accurate development finance appraisals to help clients understand the true cost of borrowing and ensure a realistic, profitable outcome.

Where to get a Bridging Loan:

There are now over 150 active bridging lenders in the UK alone, including trusted specialist lenders from banking institutions that are familiar to most. It is crucial to choose a bridging finance provider who offers transparency, speedy decision-making, and a product range that covers key needs: residential bridging loans, commercial bridging loans, auction finance, refurbishment and development bridging, as well as more bespoke solutions.

Get in touch with us to discuss your requirements today!

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