Bridging Loan FAQ Luton

A bridging loan is a short-term property loan, secured against a property asset, designed to cover the gap between two transactions or two financial positions. Terms run 1 to 24 months, almost always under 18 months in practice. The right answer to a bridge is when you need funds against a property faster than a term mortgage can deliver, where the property is currently unmortgageable on a term product, or where you have a clear exit inside a year or so. We use bridges most often for auction completions, chain breaks, refurbishment and development exit.

A term mortgage is amortising or interest-only finance with a 5 to 30 year term, priced cheaply and underwritten primarily against borrower income and affordability. A bridging loan is short-term, priced monthly between 0.55% and 1.5%, underwritten primarily against the security value and the credibility of the exit. Bridging completes in days; term mortgages take 6 to 12 weeks. Bridging does not need rental cover or income evidence to the same depth; term does. The trade is speed and flexibility against materially higher cost per month.

Often, yes. Bridging is the right answer where the property fails standard mortgage underwriting because it has no kitchen, no bathroom, structural issues, short lease, mixed-use complications, or planning consents that need resolving. The lender takes a view on the post-works or post-uplift value and lends against today's open-market value with the works in front of them. The exit is then a term refinance once the property is in mortgageable condition, or a sale at the improved value. We see this pattern weekly on Luton refurbishment cases.

Regulated bridging on owner-occupied residential property starts from 0.55% per month, typically 0.55% to 0.85%. Unregulated bridging on investment, BTL, commercial and mixed-use security sits at 0.65% to 1.25% per month. Heavy refurbishment and development exit lend at 0.75% to 1.5% per month. Second charge bridging sits at 0.85% to 1.5%. Within those bands the actual price reflects LTV, term, exit strength, borrower experience and security location. We always show you the indicative terms from two or three lenders side by side before you commit.

Arrangement fee 1.5% to 2.0% of the loan amount, added to the loan or deducted from drawdown. Valuation fee case-by-case, depending on the property type and value; budget £750 to £2,500 for standard residential security, more for commercial or multi-property security. Legal fees both sides, both borrower-paid: £1,500 to £4,000 per side typically. Most bridging products carry zero exit fee. Where the lender does charge exit fees we will flag them clearly before you sign. We never bury fees; total cost of borrowing is laid out on the indicative terms sheet.

Three options, and the lender usually steers which is available. Rolled interest compounds the monthly interest onto the loan balance month by month and is paid in full at exit. Retained interest deducts the full term's interest from the day-one drawdown, so you receive less cash up front but pay nothing during the term. Serviced interest, where the borrower pays interest monthly from cash flow, is available on some products and is cheaper in total cost. Most bridging cases we arrange in Luton use rolled or retained interest, because the borrower's cash flow is tied up in the deal.

UK individuals over 18, limited companies, LLPs and partnerships can all borrow. Most lenders accept first-time investors where the deal is straightforward and the exit is credible. Adverse credit is workable on some lenders with explanation, harder on others. What kills a case: a hand-waved exit (we cannot see how you repay the loan), a security property the lender cannot value, a borrower under active enforcement action, source-of-funds for the deposit that fails AML checks, or a deal where the numbers do not work even on a generous valuation.

Most cases settle between 65% and 75% LTV against open-market value. Regulated owner-occupier bridges typically run 65% to 70%. Standard unregulated bridges go to 70% to 75%. Heavy refurbishment and dev exit cases cap at 65% to 70%. A small number of lenders go to 80% on the right security with a strong exit, particularly where there is genuine value uplift from refurbishment. Day-one LTV against purchase price can be higher when the property is materially below market value and the lender accepts the open-market value rather than the purchase price.

Less than on a term mortgage, but not zero. Bridging is asset-led, so the case stands or falls on the security value and the exit. Lenders still want to see evidence of source of funds for the deposit, a credible business plan or works schedule, and proof you can service the loan if interest is monthly. On rolled or retained interest products the income evidence requirement is lighter. On refurbishment cases lenders want evidence the borrower can fund the works to completion. We talk this through case by case before pitching the lender panel.

Indicative lender terms inside 24 hours of triage. Full underwriting and valuation 5 to 10 working days. Legals 5 to 14 days. Total elapsed time from first call to completed funds is typically 10 to 21 working days. The fastest auction completions we have done sit at 7 working days using title insurance, a streamlined valuation, and bridging-literate solicitors on both sides. Cases that genuinely complete inside 5 days are rare and usually require an unusual lender appetite. Plan around 14 days; celebrate 7.

Documents from the borrower, almost every time. The lender packaging stage stalls when ID, proof of address, source of funds, business plan, schedule of works or exit evidence are slow to come back. After that, the legal phase stalls when the borrower's solicitor is unfamiliar with bridging and treats it like a residential purchase. The valuation rarely is the bottleneck on standard residential security; it sometimes is on commercial, mixed-use or unusual security. We pre-list the document pack at triage so you can start gathering before underwriting asks.

Yes, where the case is straightforward. The pre-conditions are: standard residential security with a willing valuer in the postcode area, title insurance in place of full legal searches, a borrower who turns around document requests inside hours not days, and solicitors on both sides who are familiar with bridging completions. We have completed Luton auction cases inside 7 working days under these conditions. Heavy refurbishment cases, commercial security and any case with title complications cannot realistically hit 7 days. Plan 14 days as the working timeline for most auction completions.

Auctions almost always require completion 28 days from the hammer falling. Some auction houses operate a 14-day extended exchange, but 28 days is the working assumption. We pitch the case to the lender panel the morning after the auction, with the legal pack in hand. Indicative terms come back inside 24 hours. The packaging, valuation and legal phases then have 21 working days to complete. We use title insurance and streamlined valuations where the lender permits to compress the timeline. Auction completion finance is core to what we arrange every week in Luton.

Yes, and we recommend it. Pre-auction indicative terms give you a maximum bid number, a confirmed lender appetite, and a working timeline. The lender cannot give you a binding loan offer before the auction because no security is yet identified, but they can confirm appetite, indicative rate, indicative LTV and the documents they will need. We package this as a pre-auction confidence letter you can share with the auction house or solicitor on request. After the hammer falls we convert the indicative terms into a formal lender offer against the actual security.

Light refurbishment is cosmetic: redecoration, kitchens, bathrooms, flooring, windows, with no change to the property layout or structure. Most light refurbs run on standard unregulated bridging at 65% to 75% LTV. Heavy refurbishment involves structural change, layout alteration, planning consents, change of use, or HMO conversion. Heavy refurb lends at lower LTV (60% to 70%) and higher monthly rate (0.85% to 1.5%). Medium refurbishment sits between the two: some layout change, no structural alteration. The lender categorisation determines which panel members can price the case sharpest.

Yes, on most refurbishment products. The lender funds the purchase day one, then releases the works tranche in drawdown stages tied to progress milestones. A typical structure is 70% LTV against open-market value for the purchase, plus 100% of the works budget released in 3 or 4 stage payments after a quantity surveyor or monitoring surveyor signs off the work to date. The total facility is sized against gross development value at completion. We package the schedule of works, contractor quote, and the lender's stage release schedule together at the application stage.

Regulated bridging is a loan secured against a property the borrower or an immediate family member occupies or is going to occupy. Owner-occupier chain breaks and downsizer bridges are the dominant use cases. Regulated by the Financial Conduct Authority. Unregulated bridging is everything else: investment property, BTL, commercial, refurbishment for sale or refinance, development exit. Not regulated by the FCA. The two have different documentation requirements, different cooling-off periods, and different lender panels. The line between regulated and unregulated is set by the security, not by the borrower's status.

We are not directly authorised by the Financial Conduct Authority; we work with FCA-authorised partners for regulated lending. For regulated bridging, where the loan is secured against a property occupied or to be occupied by the borrower or an immediate family member, we introduce clients to our FCA-authorised partners who carry out the regulated activity and provide any required advice. We do not give advice on regulated mortgages, regulated bridging or investment products. Unregulated bridging on commercial, investment, BTL and refurbishment property is not regulated by the FCA, and we arrange those cases directly. The introduction route is straightforward from the client's point of view.

Three exits dominate. Sale of the property, with a credible asking price, a marketing strategy and ideally evidence the property is already marketed. Term refinance onto a BTL mortgage, commercial term loan or owner-occupier mortgage, with a lender in principle willing to take the case on at exit. Refinance against another property on the borrower's balance sheet, where the security supports it. Less credible: hand-waved sale, refinance against an undefined lender, exit dependent on a planning gain that has not yet been granted. The lender stress-tests the exit at underwriting.

Most lenders will extend the bridge by 3 to 6 months where the original exit is still in progress, typically at a slightly higher monthly rate. Some lenders charge an extension fee; some do not. Where the original exit has failed entirely (the term refinance lender declined, the sale fell through) we package the case to a different bridging lender as a refinance and reset the clock. The worst outcome, where the borrower cannot extend and cannot refinance, is repossession and forced sale. We work hard with borrowers in the 60 days before term end to avoid this.