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Bridging Loan to buy a house

For most people buying a house happens in one of two ways - either they get a mortgage or they are buying outright, often with the proceeds of another sale. For others though, these routes might not be appropriate, and you’ll need to find another way to raise the finance to buy a house - a bridging loan is one of these alternatives.

What's in this article?

In this article we’ll look at how a bridging mortgage is different to a standard residential mortgage and we’ll discuss some examples of when it might be the right solution for you. By the end you should have a good understanding of the pros and cons of getting a bridging loan to buy a house, and be ready to take the next steps if it’s right for you.

How is a bridging mortgage different to a residential mortgage?

There are significant differences between a residential mortgage and a bridging mortgage, chiefly that a residential mortgage is designed to be a long term loan, repayable over 25-30 years.

Bridging loans on the other hand are short-term funding solutions, repayable after a term of anything between three months and three years.

Linked to this, other differences include:

  • Bridging loans are more expensive
  • Interest on bridging finance is calculated monthly and given rates are often monthly rather than annual rates
  • Bridging loans are interest only whereas residential mortgages are normally repayment, meaning you pay towards the capital and interest every month
  • There are always monthly repayments due on a standard mortgage, whereas interest on bridging loans can be rolled up and paid at the end with the capital
  • Bridging loans are quicker to arrange than mortgages, hence the appeal if you need to secure finance fast
  • Most bridging loans don’t have early repayment charges attached, whereas a lot of mortgages offer fixed rate periods, with ERCs applied if you settle or remortgage earlier

What are the pros and cons of using a bridging loan to buy a house?

As you can see from the list above, the differences between the two types of finance mean that there are pros and cons to using a bridging loan to buy a house.

Pros include:

  • Speed - a quick bridging loan is fast to arrange and more flexible when you are up against a deadline
  • They can be used in circumstances where you wouldn’t qualify for a standard mortgage, such as buying land to build on or an uninhabitable property
  • No ERCs
  • Flexible repayment options for interest

Cons to consider however:

  • Interest rates are significantly higher and so they can be expensive, especially if you are rolling up interest and taking it over a longer period
  • You need to have a solid exit strategy in place, and this could be risky is you are relying on a house sale to go through

When might you use bridging finance for a house purchase?

A great question! We’ve seen the pros and cons, but when might you actually need a bridging loan to buy a house?

Here are a few example scenarios where it might be relevant:


You had a buyer but they’ve pulled out, leaving you with a broken chain. You don’t want to cause the chain to collapse, so you use a bridging loan to literally ‘bridge the gap’, paying it off once you line up a new buyer.


You weren’t thinking of moving or have only just put your home on the market but you’ve already seen a new house that ticks every single box and you know isn’t going to be around for long.

Building a Home

You are building a home from scratch and need finance to purchase the land and materials. You know that you’ll be able to transfer to a mortgage further down the line but need finance to get the project underway.


You’re looking to buy a house at auction and know that you’ll need money in place quickly should you be successful. A standard mortgage won’t go through quickly enough, so you need short term finance just while you get that set up.

Run Down House

You’re buying a run down house to do up, but as it stands it isn’t classed by lenders as being habitable as it doesn’t have a usable kitchen or bathroom, so you aren’t eligible for a mortgage. You use the bridging loan to buy the house and then take out a mortgage to pay off the loan once you’ve completed the basic renovations.


You are waiting on an inheritance but have found the house of your dreams and can’t afford to wait for probate in case you miss out. Using a bridging loan could secure you your home and the inheritance would be a viable exit strategy for paying off the loan in full.

Alternatives to bridging loans for house purchases

If you’re not sure that a bridging loan is right for you but you don’t have the money for a cash purchase and you don’t qualify for a standard mortgage, are there any other options? Yes is the simple answer, although of course it depends on your circumstances.

If you don’t qualify for a residential mortgage for example because you are building from scratch, a self-build mortgage could work for you, where funding is released in stages throughout the project. If you’re worried about bad credit or not having enough income, perhaps a guarantor mortgage, or a joint mortgage with a family member could be an option?

If you’re looking for a bridging loan because of a broken chain or because you’re waiting on a sale then the obvious answer is simply to wait until you have a secure buyer and can proceed without having to bridge the gap. This can be frustrating though, and could mean missing out on a property you love.


Now that you understand the pros and cons of buying a house with bridging finance and can see how it compares to a traditional mortgage, you should have a much clearer picture of whether this sort of finance is right for you.

If you’re ready to start looking for the best mortgage deals or want to explore bridging loan options then get in touch and let us take those next steps with you.

Ready to talk? Speak to an expert today: 0800 077 8980

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