Homebuyers caught in a stalled property chain or facing a seller's tight completion deadline could use a little-known loan to secure their dream home, according to experts who spoke to Newspage. However, they stressed that borrowers must understand the costs, terms and conditions before taking out a bridging loan.
Used in the right circumstances, with a realistic repayment plan and a clear financial benefit, a bridging loan could be the difference between losing a dream home and getting the keys. One expert noted that bridging can help borrowers fund renovations and secure purchases that might otherwise be out of reach.
Experts defend bridging finance
Tony Sanchez, founder of Bridging Loan Directory, said: "Calling bridging finance an expensive last resort overlooks why someone might use it. It can help secure a purchase or fund work that makes a property suitable for a mortgage. The useful question is whether the total cost makes sense for what the borrower needs to achieve."
He added: "But getting the money is only half the job. There needs to be a realistic repayment plan from the outset. We should judge these loans by the whole outcome: what they enabled, what they cost and whether the borrower repaid them as intended."
Weigh up the costs
Nouran Moustafa, practice principal and Independent Financial Adviser at Roxton Wealth, said bridging finance has "an unfair reputation for being a last resort," noting it can sometimes make a property transaction possible. She gave an example of a £200,000 bridge at 0.75% monthly interest costing £1,500 per month before fees, adding that over six months that amounts to £9,000 in interest alone, assuming the full balance remains outstanding.
Moustafa said: "The biggest misconception is that bridging is inherently bad. It isn't. Borrowing without a credible repayment strategy is." She said she would discourage bridging where a conventional mortgage, further advance or other suitable funding could achieve the same outcome at lower cost, adding: "My rule is simple: bridging should solve a temporary problem, not create a permanent financial one. A successful bridge isn't one that completes quickly. It's one that exits successfully."
Stamp duty cost to consider
Harvey Dhillon, founder and CEO at Zmartly, highlighted an additional cost for homebuyers in England beyond the lender's interest and fees. He explained that a bridge lets buyers purchase before selling, meaning they still own the old home at the end of completion day, which triggers extra stamp duty on the new home, usually sent to HMRC by the solicitor on the day of completion.
Dhillon said the stamp duty is only refunded if the old home is sold within a time limit and a claim is made in time. He advised: "Count the extra stamp duty as cash you'll need on the day, and don't complete until you know both deadlines."
Judge on repayment, not speed
Dariusz Karpowicz, director of Doncaster-based Albion Financial Advice, said a bridging loan should be judged on how it's repaid, not how fast it completes. He noted that borrowing £200,000 at a monthly 0.75% rate racks up £9,000 in interest across six months, excluding arrangement fees, and that property investors must factor this expense into their initial figures.
Karpowicz said that when a vendor requires completion within weeks and accepts 20% under market value, the margin easily covers the finance. He added: "Unless you hold pure cash, bridging often remains your sole option. Pair the loan with a guaranteed exit strategy and it works brilliantly. Lack that exit, and you face the priciest accidental mortgage imaginable."
Tracey Dixon, buy-to-let mortgage specialist and owner of Cardiff-based Pure Mortgage and Protection, said: "A bridging loan should buy you time, not buy you a bigger problem." She noted that bridging can be useful when a property needs work before it qualifies for a standard mortgage, or when a purchase must complete before sale proceeds become available, but said the real test is whether the borrower can repay the bridge on time at an acceptable overall cost.
Dixon added: "'We'll refinance later' needs evidence behind it: lender criteria, affordability and a realistic valuation. Interest, fees and the cost of delays all need to be included. If a standard mortgage or a negotiated extension can achieve the same outcome more cheaply, those options deserve serious consideration. The strongest bridging case starts with a credible exit, not just an urgent deadline."
