In this guide, we explain how bridging loans work, walk through a realistic example, answer frequently asked questions, and highlight why specialist legal advice is essential when using this type of lending.

What Is a Bridging Loan?

A bridging loan (also known as bridging finance) is a short-term, secured loan used to “bridge the gap” between two financial events, most commonly, the purchase of a new property and the sale of an existing one.

Unlike traditional mortgages, bridging loans are designed for speed and flexibility, making them ideal for time-sensitive property transactions.

How Bridging Loans Work: Step by Step

1. Moving Forward Without Waiting

One of the biggest advantages of bridging finance is speed. Bridging loans provide fast access to funds, allowing buyers to move forward without waiting for a sale to complete or a long mortgage process.

This can be critical when:

• A desirable property becomes available.
• You’re buying at auction.
• A chain breaks unexpectedly.

2. How Bridging Loans Are Structured

Bridging loans are secured, usually against property. This security provides reassurance to lenders and allows borrowers to access funding quickly.

They are designed to support short-term property goals, typically over a period of a few months up to 12 months, and sometimes longer depending on the lender and circumstances.

3. A Practical Example: Buying a New Home

Let’s look at how a bridging loan might work in practice.

• You find a new home priced at £400,000.
• A £100,000 deposit is required.
• You already have a mortgage agreed for the remaining £300,000.

4. Identifying the Funding Gap

• You currently have £10,000 in savings.
• Your existing property has not yet sold.
• You need £90,000 short term to complete the deposit.

Without bridging finance, you may lose the property or delay the purchase.

5. Using a Bridging Loan as the Solution

You take out a £90,000 bridging loan, which allows you to:

• Secure the new property quickly.
• Proceed with confidence.
• Keep your current home on the market.

This effectively bridges the financial gap between buying and selling.

6. Completing the Sale and Repayment

• Your existing home sells for £350,000.
• You release £150,000 in equity.
• The bridging loan is repaid in full, along with interest and fees.

Your move is complete, and the bridging finance has served its purpose.

Why People Use Bridging Loans

Bridging loans are commonly used because they offer:

• Speed – funding in days rather than months.
• Flexibility – tailored to short-term needs.
• Opportunity – ideal for time-sensitive purchases.

They are frequently used for:

• Buying before selling.
• Auction purchases.
• Chain breaks.
• Capital raising.
• Property refurbishment and development.

The Importance of Smart Planning

A key part of any bridging loan is the exit plan — how the loan will be repaid at the end of the term. Common exit strategies include:

• Sale of property.
• Refinance onto a mortgage.
• Business or investment refinancing.

A clear exit plan keeps the transaction on track and is essential for lender approval.

Bridging Finance FAQs

What Do I Need to Apply for a Bridging Loan?

To apply for bridging finance, lenders typically require:

• A clear exit plan.
• Property details and defined objectives.
• A strategy to sell or refinance.
• The right lender for your specific transaction.

Why Does Expert Legal Support Matter?

Not all bridging lenders have the same requirements. Pre-completion conditions can vary depending on:

• The lender.
• The property type.
• The complexity of the project.

A specialist solicitor experienced in bridging finance can:

• Identify potential delays early.
• Ensure lender conditions are met.
• Register the correct legal security.
• Help complete transactions swiftly.

What Other Costs Should I Budget For?

Additional costs may include:

• Solicitor’s fees.
• Searches and Land Registry fees.
• Valuation and third-party fees.

These costs depend on the type of property and the complexity of the project.

What Is Loan-to-Value (LTV)?

Loan-to-value (LTV) is the percentage of a property’s value that you borrow.

Example:

• 10% deposit = 90% LTV.
• More equity generally means stronger borrowing options.

Is Bridging Finance Right for You?

Bridging finance is about speed, flexibility, and opportunity. When structured correctly and supported by expert legal advice, it can be an effective tool for achieving property goals.

However, bridging loans are specialist products. Working with professionals who understand the legal and practical complexities is essential to ensuring a smooth transaction.

Want to understand the legal process?

If you’re considering bridging finance and want to understand how the legal process works, speak to a specialist before you proceed.

Message us today for a free, no-obligation chat and expert guidance.

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“Addressing risks early on is critical. We pride ourselves on working with all parties involved to ensure issues are resolved promptly for the client. In this instance immediacy was a key driver.” Kieran de Vares, Solicitor

Our client’s challenge?

From the outset there were issues highlighted relating to a boundary dispute with a neighbouring development and, secondly, an ongoing claim of the borrower for adverse possession for a piece of land that would assist with the development.

Bridging the gap

The lender and valuer were having a degree of difficulty in understanding the position from a risk perspective, so we scheduled a conference call immediately with the lender to outline all concerns.

Following the meeting we talked to the borrower’s Solicitors and went through the attachments on these two issues which then enabled us to do a separate risk report to the lender which was then signed off.

Responsive and timely delivery

We were able to report on the risks within four hours of receiving the case. By picking up the phone and isolating the main issues with the borrower’s solicitors we were able to understand and report on the risks within four hours. From experience we have seen issues such as these postpone a transactions for weeks or months.

The right result for our client

After the deal completed the borrower’s solicitors emailed our client direct and the PLS senior management team to thank us for the way in which the deal was handled.

“PLS worked quickly to highlight and mitigate any potential risks for our clients. In this case our client was delighted with the outcome”  

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“In the short term lending sector, exit is critical but so is quick thinking and speed of delivery. In this case Legal documents were received for review from the borrower’s Solicitors on 13th of the month and we completed on 27th the same month.” Kieran de Vares, Solicitor

Our client’s challenge

What was the challenge? Our client’s borrower was under strict timescales to complete the loan in order to exit from an existing high interest development finance facility.

The deal was made more complex in that several unilateral notices were placed on the title for already exchanged units that were pending completion, which ultimately would rank ahead of our client’s proposed security. Nevertheless we were able to remove all notices, secure priority for the lender and then formally complete the loan within the lender and borrower’s timescales.

Bridging the gap

Development exit deals can be tricky in that we must ensure we have full building regulation sign off and NHBC (or equivalent) documentation for each unit which is pending sale. These pending sales remain in the freehold title for which our client is registering their security so it is imperative we have the appropriate sign off so value is protected.

Responsive and timely delivery

We completed the deal within two weeks!

Legal documents were received for review from the borrower’s Solicitors on 13th of the month and we completed on 27th the same month.

The right result for our client

The lender used this particular case in an article to promote their Development Exit products as proof of their ability to turn around high value development exit deals quickly.

“PLS proved invaluable in this Eastbourne, high value case. In fact we have used their approach in our own publicity to promote our development exit products”  

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Disruptors come in many forms, but this team has expanded ten-fold in just 18 months. PLS Solicitors is bringing about change to the bridging and commercial market.

How is this being achieved and what is set for the future? The Head of Secured Lending & Real Estate at PLS, Kieran De Vares explains how they have achieved such a high level of success and why the sector can be optimistic about what is to come.

Being Prepared for an Ambitious Future

“Our Secured Lending Department has grown massively in such a short time. We have essentially gone from bringing in £20,000 a month for the firm when it was just myself as a one-man band, to achieving over £100,000 per month in some months, pre-lockdown. Within the next few years, we would definitely like to be reaching a steady £3 million per year and there is no reason why within five years we cannot be aiming for £5 million per year and above. The ultimate goal within five years is to be one of the main game players in the bridging sector.

“We have no doubt these forecasts won’t be easy. It is still rather difficult to say what the future holds for us, especially in the current climate. There will be a lot of hurdles to overcome and a lot of competition within the sector. But we will continue to build on the progress we have made. We will ensure we have the right people, technology and processes in place and once these are all harmonised, I think our ambitious figures will certainly be achievable.

“Within three years, I would like to see a return to pre-pandemic levels within the sector. Even though there is so much uncertainty, we must remain optimistic.

“I believe we can be particularly optimistic within the development finance sector, as the Government will always want to support new developments. Many lenders will need to continue to adjust their lending products substantially, which will take time. It is undeniable that the next 12 months are going to be a struggle for all lenders and their panel firms. Many simply have a loss of appetite and do not have big expansion plans. As a result, it is much harder now for investors and developers to obtain finance.

“We will also hopefully start to see the number of new lenders entering the bridging market increase, which we witnessed pre-pandemic. These new lenders may unfortunately struggle and hold back until the market picks up again. The more established lenders I believe will continue to proceed cautiously over the next six to twelve months with lower LTV deals, but we will hopefully see a lot of growth thereafter. There should always be a strong demand for bridging. The ways in which short term lenders can offer a flexible and fast approach to borrowing will always be attractive to those who need finance, especially those who have suffered delays from mortgage providers during these unprecedented times.

A Cut Above the Rest – Balancing Customer Service with Technology

“Not only do PLS stand out from our competitors on client service, we are going to develop and put in place new technology that will really benefit new and existing lender clients. With the PLS portal, lenders can track and get live updates on their cases 24/7 at the click of a button through all devices. Lenders will also have the luxury of pitching this technology to their brokers. We plan on being able to ‘white label’ the portal with lender branding, with an aim for them to ‘wow’ brokers and get more business. This is something we expect to be fairly revolutionary.

“In order to achieve our ambitions while maintaining service levels, we are also going to need to expand the team, as well as further develop the software and processes. Our processes will become more streamlined so that we can reduce completion timescales and remain profitable.

“In more recent and uncertain times, we have still been receiving really positive feedback and have gained a lot of trust from our clients. As we are a technology-based and forward-thinking firm who is virtually paperless and able to access all our servers remotely, the movement from working from the office to home has been seamless. We have still billed fantastically in the first quarter of lockdown and still managed to complete a great number of loans for lenders and borrowers. Although the firm has inevitably suffered during the pandemic, thankfully our figures on the Secured Lending Team have still been strong and completion numbers high. This only further demonstrates our ability to quickly adapt to change and our ongoing commitment to our clients to deliver on service.”

An Uncertain Road Ahead – Making the Most of the Opportunity

“It is inevitable that lenders have and will continue to face difficulty. Many are being cautious, which is understandable. Before the pandemic, many lenders we work with, as I am sure with other lenders in the market, set aggressive plans for expansion of their loan books. With more of an appetite for risk, they now lend with much lower LTV. We are finding the higher risk, complex development finance is being completely avoided by some lenders due potential delays in construction and lower value per unit being sold on completion of the build to repay the loans. Unfortunately, lenders are just not as willing to lend on the same deals that they would have pre-lockdown. This has made a hit our pipelines and forecasts compared to pre-pandemic potential. The team and I just need to focus on winning as much business as possible and ensure our existing and future lender clients continue to get a service that differs from other firms.

“Suffering for firms is inevitable at the moment, particularly with commercial bridging as lenders are being much more risk averse than usual. I feel many firms are not as focussed and prepared for change as we are, so we need to take advantage of this. We need to be going full force on business development to turn this situation into an opportunity. We find our competitors’ processes in bridging are fairly dated and they may still be adjusting to the changing market and uses of technology – they are not as dynamic as we are. There is a lot of potential at PLS and even though there will be a dip in available work out there, we will be able to fight through it.”

Making Way for Change – Promoting Accessibility & Transparency

“As I mentioned before, our 24/7 portal will be a huge disrupter in the market and is way outside what could be considered the traditional approach to bridging. This will add a lot of value of service to our lender, as well as their borrowers and brokers. Even now, our clients always comment on how accessible we are. Every client has the mobile number of a team member, so this ensures direct communication is always available. We are told this level of accessibility is not so common across our competitors. This I find surprising as it is something we feel is absolutely fundamental in providing good client service. We also respond to all email correspondence from clients’ and borrowers’ solicitors within a maximum of one working day, which is something we do not often see when acting for borrowers.

“We maintain this good level of service and make it easier for clients to get in touch with us by ensuring we have the capacity to service the work we are given. We believe this is where other firms can struggle. In contrast to our competitors, we ensure we are not overloaded with work and keep our teams as small as possible to maintain the personal touch. We do not take on work unless we know we can service it, as reputation and maintaining a good client relationship is of paramount importance to us.

“With one of our lender clients in particular, we were transparent from the start about the level of work we could take on, as we were going through a particularly busy time. This was to ensure we maintained a good level of service and maintain a good working relationship, which was appreciated by the client. This allowed us to maintain a steady workflow of cases, which then thankfully increased in numbers just before lockdown due to good feedback and our increased capacities due to other lenders being more cautious. This really helped keep us afloat during the early stages of lockdown, which was invaluable to us in a scary time of not knowing how the market was going to react to the pandemic.

“Lenders often don’t expect us to get heavily involved with communications with brokers, but we recognise a good borrower experience ultimately leads to repeat work for everyone, so we do everything we can to ensure that all parties are happy with the way we conduct our cases and keep everyone informed throughout. We always ensure if brokers require an update that they are kept fully up to date on what is going on. For some of our lenders, we copy their brokers into all email correspondence with the borrower’s solicitors and invite all parties on conference calls to maintain transparency throughout. Other firms may not involve brokers as much we do, but we know the deal will run much smoother if we have all parties working together to reach the common goal.

“We will continue to ensure we maintain transparency in terms of the level of work we can take on, so both client and lender are on the same page about the service we are able to offer. To reach our full potential and maintain our reputation, our service levels to our clients will remain a priority and will always be areas in which we strive to excel.”

Nurturing Growth & Cultivating Opportunities

“A lot of our incredible growth is mainly down to support from management and the board, who have been behind us from the start and always knew the potential we have in this sector. I really admire our Co-Managing Director, Aash’s work ethic because he is so infectiously hungry, incredibly motivating and gets involved in many team meetings. A good team atmosphere and work ethic is certainly built from the top and we have a great working relationship with each other and the whole team. We both continue to drive the team forward – always thinking about what we can do next and always being positive about where this team is going. There is a lot of faith in our team which is encouraging.

“Our growth is also helped by having the right resources, expertise and the ability to quickly adapt to changes in demand and in the market. We see change as an opportunity, whereas other firms often take a while to make operational decisions and do not involve the team as much as we do in making those decisions. Our team has strong business objectives and everyone is very clear on the vision, so we will continue to grow efficiently as one unit. This is the same in other parts of the business – like the new build team who are also very keen to grow and have great relationships with their clients and developers. All our teams are very hands-on with those they work with and have the freedom to grow their own client relationships to their full potential. We bring the personal touch across all departments within the firm and that is how we are able to retain work and continue to grow.

“We work with borrowers’ solicitors and our lenders actively to get money out the door. Communication is often key to achieving this. There is a tendency within the sector to hide behind emails and put up defensive barriers when things get complicated, but it is important that everyone works together and communicates throughout in order to move forward. Our specialist, dedicated team will work with the borrowers’ solicitors where we can and remain very hands on throughout the transaction so we can see the deal through quickly but safely. I think that is how we differ from other firms, as they aren’t as focused and don’t have dedicated lawyers with secured lending expertise who are solely responsible to deal with this work, which means it can take other firms longer to get cases through because of a lack of capacity and resources.”

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