In today’s fast-moving property market, speed and flexibility often determine success. For landlords looking to expand their portfolios or seize time-sensitive opportunities, traditional mortgage routes can feel painfully slow. Enter bridging finance, a short-term funding solution designed to help landlords act decisively when every day counts.
What Is Bridging Finance?
Bridging finance is a short-term loan, typically lasting from 3 to 18 months, that “bridges” the gap between an immediate need for funds and a longer-term financial arrangement, such as a buy-to-let mortgage or property sale. Unlike conventional mortgages, bridging loans prioritise speed and flexibility, making them ideal for landlords facing tight deadlines or complex property scenarios.
Why Landlords Are Turning to Bridging Loans
The property market is competitive, and opportunities often come with strict timelines. Bridging finance offers several advantages:
- Rapid Access to Funds
Approval and drawdown can happen in days rather than weeks, enabling landlords to meet auction deadlines or secure off-market deals before rivals do. - Flexibility for Complex Properties
Many auction lots or conversion projects are unmortgageable in their current state. Bridging loans allow landlords to purchase and refurbish properties that traditional lenders would reject. - Customisable Terms
When considering a bridging loan, retained interest or rolled up interest are the most popular options. Interest always has to be paid on bridging loans and it can be paid in several different ways. Firstly, there is retained interest, which is a popular interest type in bridging finance. Secondly, you have rolled up interest, also known as capitalised interest. And finally, there is serviced interest.
Key Use Cases for Bridging Finance
- Auction Purchases: Auction properties often require completion within 28 days, a timeline that traditional mortgages rarely meet. Bridging loans provide the speed needed to secure these deals, often completing within 7–14 days.
- Property Conversions: Converting a single-let into an HMO (House in Multiple Occupation) can deliver higher rental yields, but it requires upfront capital and time. Bridging finance covers both purchase and renovation costs, enabling landlords to unlock value quickly.
- Chain Breaks and Portfolio Growth: If you’re waiting for a property sale to complete or need funds to refinance, bridging loans can keep your plans on track without costly delays.
How Does It Work?
The process is streamlined compared to traditional lending:
- Decision in Principle – Often within 24–48 hours.
- Valuation & Underwriting – Focused on current and projected property value.
- Drawdown – Funds released quickly to complete purchase or start works.
- Exit Strategy – Typically refinancing onto a buy-to-let mortgage or selling the property.
Benefits at a Glance
- Speed: Complete in days, not months.
- Flexibility: Finance unmortgageable properties and include refurbishment costs.
- High LTV: Up to 75% of property value plus works.
- Multiple Exit Options: Sale or refinance.
Risks to Consider
Bridging loans come with higher interest rates than standard mortgages and require a clear exit strategy. Failure to repay on time can lead to significant costs, so planning is essential.
At 3mc, we have a team of expert advisers who can discuss all your mortgage requirements. If you would like to discuss your options, give the 3mc team a call on 0161 962 7800.
All calls are recorded for training and monitoring purposes. 3mc for intermediaries only.
*Your home may be repossessed if you do not keep up repayments on your mortgage. 3mc (UK) Ltd is authorised and regulated by the Financial Conduct Authority and is entered on the Financial Services Register https://register.fca.org.uk/s/ under reference 302992. Please note: The FCA do not regulate Business Buy to Let Mortgages.
