If you need quick property finance, a bridging loan could be your answer.
These short-term loans help property buyers, investors and business owners move quickly when opportunities arise.
But what exactly can you use as security?
The good news is that UK bridging lenders accept a wide range of properties. While some lenders specialise in standard residential homes, others focus on commercial buildings or development land.
Many will consider unusual properties too – as long as you’ve got a solid plan for repaying the loan.
In this guide, we’ll share what we’ve learned from arranging bridging loans across all property types. You’ll discover which properties typically secure the best rates, what lenders look for, and how to improve your chances of approval.
Whether you’re buying at auction, breaking a property chain, or funding a renovation project, understanding your options is the first step.
Bridging Loans and How They Work
Let’s start with the basics.
A bridging loan is simply short-term property finance that helps you move forward when traditional mortgages aren’t suitable. These loans run from 3 to 36 months, with monthly interest rates.
The costs include arrangement fees (typically 2% of the loan amount), plus valuation and legal fees. While monthly rates are higher than traditional mortgages, remember you’re paying for speed and flexibility – these loans can often be arranged within 5-10 days.
You’ll come across two main types: open and closed bridging loans.
Think of a closed bridge like a fixed-term contract – you know exactly when you’ll repay it, often because you’ve got a property sale lined up. Open bridges offer more flexibility with no fixed end date, though they usually need repaying within 12 months.
The application starts with an assessment of your property and exit strategy (that’s how you’ll repay the loan). You’ll need to show proof of ID, address, and details about your experience if you’re investing in property. The lender will then arrange a valuation and get their legal team working on the paperwork.
Bridge loans don’t normally need any monthly repayments. The lender’s interest is calculated each month and then you repay everything in one go, before the loan term ends.
Read more: A Guide to Bridging Loans
Property Types
A bridging loan offers flexibility when it comes to the types of property you can use. Whether you own the property already or are looking to purchase, here are the main options available to borrowers, with real examples from our experience:
Residential Properties
Standard homes are nice and straightforward and make excellent security for bridging loans.
Lenders can offer up to 80% of the property’s value on typical brick-built houses and flats. Take Mrs. Smith in Manchester – she found her perfect home but hadn’t sold her existing property. A bridging loan secured against her current house meant she could move forward without losing her dream home.
Non-standard construction properties need a bit more attention.
These include timber-framed houses or concrete builds. While most lenders will consider them, they will want extra surveys and offer slightly lower loan amounts. But don’t let that put you off – if the property’s in good condition and a desirable location, you’ve got plenty of options.
Commercial Properties
Office buildings, shops, and warehouses are all welcome as security for commercial bridging finance. Lenders typically advance up to 70% of the value – slightly less than residential because commercial values can change more quickly.
Some commercial properties need special consideration.
Hotels, petrol stations, and restaurants fall into this category. You can still get bridging finance, but expect more questions about the business potential and slightly higher rates.
We recently helped a client secure a bridging loan on a former pub in Leeds – the key was showing the lender the strong local demand for converted commercial spaces.
Mixed-Use Properties
Mixed-use properties offer interesting opportunities for bridging finance.
Picture a traditional high street building – shop downstairs, flats above. These semi-commercial properties often appeal to lenders because they combine two potential income streams.
The assessment process works a bit differently here.
Your lender will look at both the commercial and residential elements separately. They might offer 70% against the shop space and up to 75% on the flats above. We recently arranged finance for a client buying a Victorian property in York – the ground floor retail shop helped support the value of the two apartments above.
The current tenancy situation matters too. Strong, established tenants can make your application more attractive. Your lender will also check any relevant planning permissions, especially if you’re planning changes to how the property’s used.
Land
Getting finance for bare land can be straightforward – it all depends on planning permission.
With permission in place, most lenders will offer up to 70% of the land’s value. They’ll want to see the specifics of what’s been approved, check how long the permission lasts, and understand local market conditions.
Multiple Properties as Security
Sometimes using more than one property as security makes sense.
This approach, called cross-charging, can help you borrow more or access better rates. For example, we worked with a property investor who used three terraced houses to secure a larger loan for a commercial conversion project.
A cross-charge bridging loan is one way that investors can get 100% finance for a purchase. They raise all of the money from equity across multiple properties.
The benefits go beyond just increasing your borrowing power.
Spreading the security across several properties can make your application more attractive to lenders. Just remember that all properties used as security will be linked to the loan.
Special Circumstances
Renovation projects and bridging finance go hand in hand.
Whether you’re planning a light refurbishment or a major overhaul, lenders will want to understand your plans. They’ll look at the proposed works, your experience with similar projects, and most importantly, what the property will be worth once completed.
For larger renovations, many lenders release funds in stages.
This helps you manage cashflow and gives the lender confidence their money is being used as planned. A recent client used this approach to transform a neglected Victorian villa into three luxury apartments.
Auction purchases need quick thinking and quick auction finance.
With most auction properties requiring completion within 28 days, traditional mortgages rarely work. Speed matters here – that’s why it’s worth talking to us before you bid. Our brokers can assess the property, line up suitable lenders, and get things moving as soon as you’ve secured your purchase.
Security Requirements
Understanding how lenders secure their loans helps you plan better.
First charge loans, where the bridging lender has primary claim on the property, offer the best rates. But second charge loans can work well too – particularly if you’ve got plenty of equity in a property with an existing mortgage.
The valuation process might seem like a formality, but it’s essential.
Professional valuers look beyond just current market value – they consider the property’s condition, local market trends, and potential resale value. Their report helps lenders make informed decisions about how much they can offer.
Related reading: Do I Need a Solicitor for a Bridging Loan?
Unmortgageable Properties
Many ‘bargain’ properties sold at auction are unmortgageable by standard mortgage lenders. They always need a property in good condition that can be lived in on completion.
But this doesn’t mean you can’t finance them. Let’s look at why bridging loans are often the perfect solution.
Common ‘unmortgageable’ issues we see include:
Property condition: No kitchen, bathroom, or even a roof? Many auction properties need serious work. While regular mortgage lenders won’t touch them, bridging lenders will often help if you’ve got a solid plan for the renovations.
Short leases: Properties with leases under 70 years put off most mortgage lenders. Bridging finance can help you buy the property and extend the lease, making it mortgageable for your exit strategy.
Non-standard construction: Whether it’s concrete panels, timber frame, or historic materials, some construction types scare away traditional lenders. Bridging lenders take a more flexible view, focusing on the property’s potential.
Remember, while these properties might be unmortgageable now, your exit strategy will need to involve making them mortgageable through improvements.
Make sure you understand:
- What needs fixing to make the property mortgageable
- How much the work will cost
- How long it will take
- What the property should be worth afterwards
While bridging lenders will lend against almost anything, your loan will always be based upon their opinion of the value.
How Bridging Lenders Value Properties
Getting your property valued is a key step in any bridging loan application. Lenders use three main methods, each with different benefits and limitations.
Full Physical Valuations
The most thorough option. A qualified surveyor visits the property, checks its condition, and provides a valuation report. Most lenders require these for commercial properties, renovation projects, or loans over 75% LTV.
Desktop Valuations
Faster and cheaper than full valuations. Surveyors assess your property using online data and local market knowledge. These often work well for standard properties in typical locations, usually for loans up to 75% LTV.
Automated Valuation Models (AVMs)
The quickest and most cost-effective method. Computer systems instantly estimate value using market data. Only suitable for standard residential properties in well-documented areas, typically for properties below £1m and 70% LTV.
Next Steps
Getting a bridging loan requires careful planning and it’s difficult to do it all by yourself.
Start by looking at your property realistically – its condition, value, and any existing finance. Think about your exit strategy, as how you will repay the loan often matters more to lenders than the property itself.
Documentation needs vary by lender and property type. Having everything ready speeds things up considerably. But don’t worry about getting everything perfect – that’s where our brokers come in.
At Respect Mortgages, our brokers understand bridging finance inside out.
They know which lenders prefer which property types and who offers the best terms for your situation. Specialist experience means they can spot potential issues early and find ways around them.
Ready to explore your options?
Give us a call.
We’ll talk through your property plans and help you understand what’s possible. Whether you’ve got a straightforward residential property or something more complex, we’ll help you find the right bridging finance solution.
Contact us today on 0330 030 5050 to get matched with a bridging loan expert.
