Is a bridge loan a good idea and how does it work?

A bridge loan is a form of temporary financing that enables property owners to purchase a new investment property before selling their existing property.

Bridge loans are often the best option when you need funding quickly and have equity in other properties. These types of financing plans can have some risks, such as high interest rates and the risk of using the value of the property as collateral for another loan.

Bridge loans: How do they work?

It can be a challenge to purchase a new investment property, as with all property purchases. In an ideal world, we would sell our current property just in time so that the proceeds could be used to purchase the new property. It is rarely this smooth. Chains break down, sales fall through, and funding can become stuck. Bridging loans can help in these situations.

A bridge loan is a perfect solution for bridging the gap between purchases. Bridge loans can be used as a short-term source of funds for purchasing an investment property and have repayment terms of 6 – 12 months.

Here is an example of how the procedure might work:

  • You can apply for a bridge loan through a broker or direct lender.
  • Once the bridge loan is approved and funds are received, you can use the proceeds from the bridge loan to fund a down payment (of the full amount) on the new investment property.
  • After the purchase has been completed, any work on the new investment property can begin immediately.
  • At the end of the loan term, the existing property will be sold, and the proceeds used to repay the bridging loan in full.

You can typically qualify for a bridge loan up to 70% of its value. If your current investment property does not have at least 30% equity, it may be difficult or impossible to obtain enough proceeds from a bridge loan. In order to determine what the final repayment would be and whether you are eligible for a loan, it is important and recommended that you consult a bridging calculator.

If you’re considering a bridge loan, your current investment properties value is one of the most important factors in determining which lender to use. If you don’t hold at least 30% equity in your house and it hasn’t been paid off, a bridge loan is not an option.

One of the most important aspects of this type of financing option is that it makes sense only if you have sufficient funds from other sources or assets to cover the amount being borrowed.

Direct lenders vs. bridge loan brokers

The number of bridging loan firms in the UK is steadily growing as more and more people use this type of gap loan to get funding. Most of these companies, however, are brokers rather than direct lenders.

Brokers are middlemen who work with their known funding lenders to arrange loans.

Often, brokers charge for their services, which can be very expensive and adds additional and sometimes unnecessary costs to the process.

Direct lenders allow you to speak directly with the people who are lending the money. You can save a lot of money by removing this middleman, as well as speed up the loan process since you will be speaking directly with the lender.

Bridge Direct is a direct lender, not a broker, which means they have direct access to funds. Bridge Direct was founded to help business customers in London, Manchester and throughout the UK with short-term bridging loans. This company has extensive experience in securing funding for all types of situations, thanks to its extensive financial skills (including mortgages and commercial lending).

In short, if you’ve found it difficult getting approved by a traditional lender because of bad credit, then don’t worry! Bridge Direct assesses each deal on its own merits, so no matter your situation, we may have a bridging loan for you!

Please fill out the “Get an Instant Quote” form at, and you’ll receive a call with an instant decision directly from the decision maker. Bridge Direct may have a bridging loan solution for your situation!

You can also reach a decision maker by calling 020 3126 4969.

Contact Bridge Direct

You can contact bridge direct in many ways, you can contact us directly using the contact details below;

 020 3126 4969

Alternatively, fill in the contact form below and one of our decision makers will contact you shortly to help you.