How does a bridging loan work?
A bridging loan is borrowing for a short term, measured in months rather than years, secured by a legal charge over property and repaid in a single sum at the end from a planned event the lender calls the exit: the sale of the property, the sale of another property, or a refinance onto a longer-term mortgage. Nothing is repaid monthly in the ordinary way; the interest is dealt with inside the loan, and the capital and the interest are cleared together when the exit happens.
Through CapExpand the borrower is a limited company or an LLP and the property is commercial, or residential held as an investment; a bridge on a property the borrower lives in is a regulated mortgage contract, which we do not arrange. We have access to a range of UK commercial finance lenders through our principal, White Rose Finance Group Limited. Each lender publishes its own maximum loan-to-value, term, rate and fees and makes its own decision. Think carefully before borrowing. Property or other assets offered as security may be at risk if you cannot keep up repayments.
The three parts of every bridge
The security: a first or second legal charge over the property, sized by the lender’s valuation and its published maximum loan-to-value. The term: a fixed number of months agreed at the outset, with the loan due in full on the last day whether or not the exit has happened. The exit: the specific event that will repay the loan, which the lender underwrites as closely as it underwrites the property, because a bridge with no credible exit is a loan with no repayment.
How the interest is charged
Bridging interest is quoted per month and handled in one of three ways, which the agreement states. Retained: the interest for the whole term is calculated at the start and deducted from the advance, so the borrower receives the loan net of it and makes no payments during the term. Rolled up: the interest is added to the loan each month and the whole sum is repaid at the exit. Serviced: the borrower pays the interest monthly, as on a conventional loan, which needs income to cover it and is the arrangement most bridging lenders reserve for borrowers who can show it.
Retained and rolled-up interest both mean the balance owed at the end is larger than the sum received, and the loan-to-value the lender tests is on the gross figure including the interest. Each lender publishes its own monthly rate, arrangement fee, exit fee where it charges one, and valuation and legal costs; we show the figures each lender provides so you can compare them, and no rate appears on this page.
First charge and second charge
A first-charge bridge is secured on a property with no other mortgage, or one where the bridge repays the existing mortgage. A second-charge bridge sits behind an existing first mortgage, which stays in place, and is secured on the equity above it; the first lender’s consent is usually required and the second-charge lender publishes a maximum combined loan-to-value across both loans. The legal charge answer explains the ranking.
How the exit is tested
Sale as the exit: the lender reads the valuation, the market for that kind of property and the time a sale would take, and sets the term with margin to spare. Refinance as the exit: the lender wants to see that a term lender would lend on the property once the bridge has done its work, for example once a building is let, refurbished or has planning, and some lenders ask for an agreement in principle from the refinancing lender before they advance. Sale of another property as the exit: the lender reads that property too.
The common bridging cases are a purchase at auction, where the contract commits the buyer to complete within a fixed period, commonly 28 days, before a mortgage could be arranged; a purchase that has to complete before an existing property is sold; a refurbishment that a term lender would not fund until the work is done; and a refinance that has to complete before a current facility expires.
What a bridging lender asks for
The property details and the purpose; the exit, with evidence (the sale particulars, the agreement in principle, the schedule of works); the last filed accounts and the last 3 months of bank statements, read for the directors’ standing rather than for affordability where the interest is retained; the source of any deposit; and the directors’ details for the personal guarantees that are commonly asked for alongside the charge. The lender instructs its own valuation and its own solicitors, and the charge is registered at the Land Registry and, for a company, at Companies House within 21 days under Part 25 of the Companies Act 2006.
For property-secured lending we work with UK limited companies and LLPs only, for business and commercial purposes. Enquiring does not affect your credit score. If you apply to a lender, it runs its own credit search, which may be recorded on your file.
What goes wrong
The exit slipping. A sale that falls through or a refinance that is declined leaves the loan due on its last day with no money to repay it. Lenders charge default interest at a higher rate once the term has expired, and can enforce the charge. Most bridging problems are exit problems, which is why the term is set with room in it and why the exit is tested before the loan is agreed, not after. A bridge that is running out of term can sometimes be refinanced with another bridge, at a cost; each lender publishes whether it will re-bridge.
Frequently asked questions
How long can a bridging loan run?
Each lender publishes its own maximum term, in months, and sets the term for a case against the exit. The loan is due in full on the last day of the term.
Do I make monthly payments on a bridging loan?
Only on a serviced bridge. With retained or rolled-up interest there are no monthly payments; the interest is settled inside the loan and everything is repaid at the exit.
Can a limited company get a bridging loan on an auction purchase?
Yes, and it is one of the commonest uses. The auction contract fixes the completion date, commonly 28 days from the fall of the hammer, and the bridge is arranged to complete inside it with the legal pack read in advance.
Is bridging regulated?
CapExpand Ltd (FRN 1060885) is a credit broker and an Appointed Representative of White Rose Finance Group Limited (FRN 630772), which is directly authorised and regulated by the Financial Conduct Authority. We are a broker, not a lender. We work with UK limited companies and LLPs only, for business and commercial purposes. If you have a complaint, our complaints page explains how it is handled. A bridging loan secured on a property the borrower or a family member lives in is a regulated mortgage contract, which we do not arrange.
Does enquiring affect my credit score?
Enquiring does not affect your credit score. If you apply to a lender, it runs its own credit search, which may be recorded on your file.
How is CapExpand paid?
We will receive commission from lenders. On some cases we also charge a fee, which we set out in writing and agree with you before you proceed.
More funding questions answered
- What is mezzanine finance?The layer between the senior debt and the equity: a second charge or a subordinated loan that fills the gap a senior lender will not, on a development or an acquisition.
- What is a business overdraft?A limit on the current account the business draws into and repays at will, charging interest on the overdrawn balance and repayable on demand; arranged with the bank, not a broker.
- What is a management buyout?The purchase of a company by the managers who run it, through a new company funded by senior debt, a vendor loan note and the managers’ own equity.
- What is hire purchase?A business pays for an asset in instalments and owns it after the last payment and the option fee: who owns what and when, VAT and capital allowances.
- What is working capital?Current assets less current liabilities: the working capital cycle in days, how to read the figure from the accounts, and where finance fits.
- What is a term loan?A fixed sum repaid with interest in instalments over an agreed period: the parts of a term loan, amortisation, covenants and events of default.
A bridge with an exit
The property, the amount, the term you need and the exit are enough for us to check the case against each lender’s published criteria before anything is sent anywhere.
Sources
Checked 26 October 2026. This page explains how a bridging loan is structured; each lender publishes its own term, loan-to-value, rate and fees, and nothing here is a quote.
Important information
Think carefully before borrowing. Property or other assets offered as security may be at risk if you cannot keep up repayments.
CapExpand Ltd (FRN 1060885) is a credit broker and an Appointed Representative of White Rose Finance Group Limited (FRN 630772), which is directly authorised and regulated by the Financial Conduct Authority. We are a broker, not a lender. We work with UK limited companies and LLPs only, for business and commercial purposes. We do not provide financial advice.