Residential Bridging Loans

If you are looking for short-term property finance in order to bridge the gap between selling one home and purchasing another, then a residential bridging loan allows you to act fast when faced with tight timeframes.

Residential bridging loans are often used as an alternative to standard mortgages. Offered on an interest only basis, they are designed to be quick, flexible and provide peace of mind when it comes to property transactions.


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The best time to take a bridge loan

At Bridging Options our residential bridging loans can help individuals in a variety of situations. From broken property chains to home renovation or buying at auction, we offer bridge finance when you need it the most.

Our residential bridging loans can be used to: –

Fix a broken property chain

Buying and selling property can be precarious, stressful and often leads to heartbreak – especially when a buyer pulls out. But, by taking out a short term residential bridge loan you can secure the house of your dreams whilst your current home is still on the market.

Flip a property

When you are buying and selling property quickly, a long term loan or mortgage arrangement may not be suitable. Therefore, a bridge loan provides you with a quick fix solution to finding the finance.

Buy at auction

Time is of the essence when you purchase a property at auction, as you have just 28 days to complete the process. But, with a residential bridging loan you can secure all the finance you need prior to putting a mortgage in place.

Refurbish an existing property

If a house you have bought needs substantial improvements, then a bridge loan can allow you to renovate the property before full capital is available.

Who is eligible?

Bridging loans are great for homeowners and property developers alike, who require large amounts of money quickly – but this type of lending does come with a certain set of criteria.

At Bridging Options, we arrange residential bridging loans for: –

1. Property owners

A bridge loan is an interim loan in which the equity from a property (or properties) you already own is used as collateral for the down payment towards another. For this reason, we would need to carry out a valuation of your current property and may ask for proof of evidence that you have an offer in principle for a mortgage agreement.

2. Property developers

For those who enjoy renovating and refurbishing property, we often ask for evidence of previous projects to ascertain whether you have a good understanding and track record within the industry.

3. Those who have a non-standard repayment strategies

If you are using an investment or inheritance to secure a residential bridging loan, then we will need to see proof that the funds are entering your bank account within a set period or timeframe.

Types of residential bridging loans

There are two main types of bridge loans that you can choose between:

1. A closed bridge loan

A closed bridge loan requires you to have a set date for repayment at the outset and are usually settled within a matter of months. This means that you have a credible payment plan and can inform us of your exit strategy. This may involve the sale of a property or the securement of longer-term finance such as a mortgage. As this type of bridge loan carries less risk, we are often able to offer better rates of interest.

2. An open bridge loan

An open bridge loan can be taken without a specific end date or an exit strategy in place. This type of bridging loan is much more flexible, often with open ended repayment terms and is commonly used to obtain funds for urgent transactions. As this type of bridge loan carries significant risk our rates for an open residential bridging loan tend to be higher.

FAQs on Residential Bridge Loans

Not all types of bridge loans are regulated by the Financial Conduct Authority (FCA), however, most residential bridging finance is, providing that the loan you take out is secured on property that you, your partner or a close family member intend to or currently live in.

Being regulated protects you from any form of mis-selling and bad advice, amongst other things, and allows you to log complaints to the Financial Ombudsman Service.

If, however, you take out a bridging loan that is secured on a property that you, your partner or a close family member do not live in, it is likely to be exempt from FCA regulations. This is often the case for buy to let properties.

At Bridging Options, we can advise and support you when it comes to taking out a bridge loan. We’ll assess your current property assets, guide you through the financial legislation and recommend on a case by case basis how best to secure a residential bridge loan with us.

The amount of money you can borrow is primarily based on your property portfolio and is entirely at our discretion. Please note that we quote a maximum loan to value (LTV) rate, which is calculated by taking the size of the loan and dividing it by the price of the property you are using to secure the bridging loan.

To find out just how much you are eligible to borrow, take a look at our easy to use calculator and receive an instant, no obligation quote via your email or mobile.

Every bridging loan has to have an exit strategy. This means that it is usually paid off once the property used to secure the loan has been sold or you have secured a long-term mortgage.

The rate of interest we charge for your bridge loan is typically repaid in one of three ways:

  1. Monthly – interest is paid each month and therefore not added to the balance of the loan.
  2. Rolled-up – interest is accumulated each month and paid at the end of the term, when the original loan is repaid.
  3. Retained – the cost of the interest owed is also borrowed as part of the original bridge loan. This total amount is then repaid at the end of the agreed term.

It is important to note that failure to repay back the loan could result in your property being repossessed. At Bridging Options, we will keep in regular contact with you in order to check that projects are going to plan and to make sure that you are on track for repayment.

Why choose Bridging Options?

Residential bridging loans are a popular and useful form of property finance, but at Bridging Options we appreciate that comparing different rates and terms can be complex and confusing.

If you need access to funds quickly, have a property that is not yet eligible for a mortgage or have had previous funding that has fallen through – then contact our experienced advisers today. Our expert team are the best in the bridging loan business and can offer free advice that is easy to understand.