Bridging loans are growing but speed needs a solid exit plan

Research from Karis Capital, reported by The Intermediary, says the value of new bridging loans taken out by UK homeowners rose to £1.83 billion in the year to 31 March 2026, from £1.75 billion in the previous year. The firm linked the increase partly to owner-occupiers trying to avoid delays in property chains.

That does not mean bridging finance has suddenly become the obvious answer for every difficult move. It means more buyers are considering a specialist option that can be useful in the right circumstances — and expensive or risky in the wrong ones.

What is a bridging loan?

A bridging loan is short-term borrowing secured against property. It is designed to “bridge” a temporary funding gap rather than replace a normal residential mortgage for the long term.

Imagine you have found the home you want to buy, but the sale of your current property is taking longer than expected. A bridge may allow you to complete the purchase before your sale finishes. When your existing home sells, the proceeds can be used to repay the bridge. Another possible exit is replacing it with a longer-term mortgage.

That sounds simple, but the final sentence is the important one. Every sensible bridging arrangement starts with a realistic exit plan: exactly how the loan will be repaid, by when, and what happens if the preferred route is delayed.

Why can bridging be attractive?

Property chains are fragile. One delayed buyer, valuation, legal query or mortgage offer can affect several connected transactions.

A bridging loan can sometimes help a buyer break that chain, proceed more quickly or buy a property that is not yet suitable for a standard mortgage. It can also be used in areas such as auctions and refurbishment, although those cases bring their own risks and requirements.

Speed is the main appeal. However, “quick” should never be confused with “easy” or “cheap”.

A bridge is normally priced as short-term specialist finance. Interest may be paid monthly, retained from the advance or added to the balance. There can also be arrangement, valuation and legal costs, along with other charges depending on the lender and the case.

The useful comparison is therefore not just the advertised interest rate. It is the total amount you may have to repay after all interest and fees over a realistic period.

The exit plan matters most

The most common problem is not necessarily getting the bridging loan. It is what happens if the intended repayment route does not arrive on time.

A property sale can fall through or achieve less than expected. A planned remortgage can be affected by affordability, the property valuation, its condition or a change in the lender’s criteria. Building work can overrun. Legal issues can take longer to resolve.

Before proceeding, it is sensible to test the plan against less comfortable outcomes. What if the sale takes three months longer? What if the price has to be reduced? What if the long-term lender says no?

The FCA’s mortgage rules require firms to assess whether a customer can repay a regulated mortgage, and its current guidance makes clear that the rules also apply when the term of a bridging loan is extended. That protection matters, but it does not remove the borrower’s risk. A loan secured against your property can ultimately put that property at risk if it cannot be repaid.

Regulated and unregulated are not the same thing

The regulatory position depends on how the property will be used and the exact structure of the borrowing.

A bridge involving the home you live in, or intend to live in, may be a regulated mortgage contract. Investment-property and commercial borrowing can sit outside the same regulatory framework. There are detailed definitions and exceptions, so do not assume the word “bridging” tells you what protections apply.

Ask the adviser or lender directly whether the proposed loan is regulated, what that means for you, and which complaints and compensation protections apply. You can also check the firm and its permissions using the FCA Firm Checker.

What this means for you

If you are moving home, a bridging loan may give you another route when timing is the problem. But it should be compared with the realistic alternatives: renegotiating dates, selling first, reviewing whether your existing mortgage can be ported, or arranging a conventional mortgage in a different way.

If you are a landlord or property investor, bridging may help with a time-sensitive purchase or property that needs work. The finance, regulation and tax position can be different from a residential move, so specialist advice is important.

Before agreeing to anything, ask for a clear written breakdown covering:

- The total amount repayable if you exit after three, six or twelve months.

- Every fee, including any charges for extending or repaying the loan.

- The evidence supporting the main exit plan and the backup plan.

- What happens if the sale price is lower or refinancing is declined.

- Whether the loan is regulated and what consumer protections apply.

Three practical takeaways

1. Treat the exit plan as the starting point, not an afterthought.

2. Compare the total cost over a realistic timescale, not just the headline rate.

3. Use a properly authorised firm and confirm whether your particular loan is regulated.

Bridging finance can be a genuinely useful tool, but it is specialist borrowing secured against property. If a delayed chain or unusual purchase is causing a problem, My Simple Mortgage can help you understand the available routes and the questions worth asking before you commit.

This article provides general information only and is not personal mortgage advice. Your home or property may be repossessed if you do not keep up repayments on a mortgage or other loan secured against it.