Nearly one in five bridging loans are now being used to stop a house move from collapsing, according to research from Bridging Trends. The data shows 18% of loans taken out between April and June were used to prevent a chain break, up from 14% in the first three months of the year.
Almost a quarter of house sales initially fall through, with around 6% collapsing and then staying off the market for at least 12 months. Sellers aiming to rescue a sale by using a bridging loan are paying an average rate of nearly 10% a year before fees.
Second-charge loans rise sharply
More homeowners are now borrowing alongside their existing mortgage. Second-charge loans rose from 9% to 22% of all bridging loans between the first and second quarters, the highest share since early 2021.
Tony Sanchez, founder of Bridging Loan Directory, told Newspage that borrowers should understand the extra costs before committing to a bridging loan. He said: "Saving a property chain is not necessarily a sign that someone is borrowing just to survive. A bridging loan can solve a timing problem, but the key question is what happens if the expected sale takes longer or achieves less than hoped."
Experts warn on expensive debt
Sanchez added: "We've seen delayed exits lead to additional interest, extension fees and fewer refinancing options. Buying more time only helps if there is a realistic route to repayment. Before committing, borrowers should understand the total cost, what happens at expiry and whether accepting a lower sale price could leave them better off than borrowing to hold out for more. Keeping an existing mortgage through a second-charge loan doesn't remove those questions."
Nouran Moustafa, practice principal and Independent Financial Adviser at Roxton Wealth, said buyers could be "stacking expensive debt against the same property". She said: "Bridging is increasingly being used as financial breathing room, but there is a huge difference between solving a temporary timing problem and borrowing simply to keep an unaffordable situation alive. At nearly 10% before fees, this is expensive money."
Worrying trend in borrowing
Harvey Dhillon, founder and CEO at Zmartly, described the trend as worrying. He said: "Some people will be using bridging loans just to survive, and I'd worry most about anyone bridging against a house that hasn't found a buyer. Borrowing alongside your existing mortgage only makes sense if the sale can pay off both loans and any tax."
Dhillon added: "If the bridge is repaid by selling your own home, there's usually no capital gains tax. If you're selling a buy-to-let, a second home or an inherited house, there may be, and the timing is easy to miss. On completion, your solicitor pays off any loan secured on the property and sends you the balance. Capital gains tax isn't part of that: you report and pay it yourself, and on a property sale HMRC doesn't wait for your next tax return. If the bridge and its interest take most of the sale money, that bill has to come from somewhere else, so work it out before you borrow."
