It's becoming increasingly common in residential property trasnactions
Bridging loans are an increasingly popular tool for mortgage brokers. The total amount lent through bridging loans in the UK is expected to exceed £10bn and potentially reach £12.2bn in 2025.
Bridging, a short-term loan with an average monthly interest rate of 0.86%, is designed to finance projects which are expected to return a profit quickly - such as the gap between buying and selling property.
This speed and flexibility for investors has been cited as a major reason for its growth. The average completion time for bridging loans decreased by 23% year-on-year, dropping from 58 days in 2023 to 47 days in 2024.
That has led to bridging becoming more prevalent in everyday residential property transactions.
"While bridging was once predominantly used by property flippers and developers, it's becoming more common in everyday residential property transactions, particularly in buy-before-sell scenarios," Fergus Allen of Clifton Private Finance said. "Our bridging team has grown from two to over 10 over the last few years.
"Bridging provides complete flexibility and buyer power in the market. If there's a property you have your heart set on and you're at risk of losing out, a bridging loan could be the difference. This is why they're becoming more commonplace in the residential space - the property market is as competitive as ever."
According to Bridging Trends, the largest sector for bridging loans for Q1 in 2025 was investment purchases but chain breaks are typically among the most common.
There's another notable type of investor brokers are advocating bridging for, however: those with houses in multiple occupation (HMO) portfolios. HMOs - properties with three or more tenants from different households - are an increasingly popular option for investors, with returns higher than other areas of property investment. Research by Landbay in 2024 found that half of HMO landlords use their portfolio as their main source of income.
"We work with a large number of small to medium sized developers who use bridging across multiple property types," Michael Bowdidge, of Affinity Group, said. "We've seen a large increase in the HMO conversion space which has led us to working with a number of new bridging lenders focusing on light to very heavy refurb and the commercial conversion market."
The effect is bridging introduces a wide net of eligible investors. The emphasis on project viability over credit score has enabled a high number of first-time developers to utilise the product.
"We have an increase in first-time developers using bridging loans in the last 12 months," Rebecca Lewis, of the Affinity Group, confirmed. "This is often to allow them to acquire and complete renovations to a property. We are specifically seeing a lot of clients use bridging loans to purchase large houses for HMO conversions and a real uptick in clients purchasing properties via a bridging loan with the view to let them to corporate tenants.
"For us, Glenhawk, West One and Aspen really do stand out [for this]. Their flexible approach to complex scenarios, along with their agility and ability to act quickly really does put them at the top of the list in our eyes. Their communication throughout the process is also excellent. This is something that, as a broker, is invaluable."
But with all the advantages bridging finance brings to investors, brokers are telling their clients to be wary of its risks.
"Exit is always the primary concern with structuring deals," Bowdidge said. "We always look to ensure we have at least three viable options to exit should the first not be achieved and one of the key issues to consider here is the end valuation of the project. We have seen considerable swings in end valuations in the last 12 to 18 months so knowing the local market is vital.
"Other key considerations are planning timeframes, if looking at pre-planning options, as these vary considerably across different geographic locations as well as cost of works. Building costs have considerably increased over recent years so having key contractors in place is vital whether looking at light refurb or full refurbishment projects to keep projects on track and on budget.
"With more brokers entering this space, the danger is choosing a broker who doesn’t have the expertise to not only guide a client through the application process but also the entire project."
