Bridging loans are unlocking big opportunities for developers to move fast, take risks, and scale up
Bridging finance is shedding its ‘last resort’ image as lower costs fuel fast property deals from auction buys to refurbishments, unlocking opportunities for small and mid-sized developers.
“Bridging finance has become a vital and mainstream solution," Vic Jannels, CEO of the Bridging & Development Lenders Association (BDLA), said. "The sector’s record-breaking Q1 2025 performance – £2.8bn in completions and £18.34bn in applications – reflects both the versatility of bridging and the urgent need for speed and flexibility in uncertain times."
Property developers in particular are turning to bridging loans to fund time-sensitive deals with a high proportion of them regularly returning to fund more projects.
"Increased competition has driven down the cost of bridging, so that there are now a good choice of lenders who offer interest rates around 7% per annum, which is not much higher than mortgage rates and without early redemption charges," said Sam
O'Neill, head of bridging at KIS Finance.
Bridging loans are most commonly used for property chain breaks, auction purchases, trading up or down, light to medium refurbishments and property conversions, according to BDLA data, but increasingly they are also financing business cash flow, unexpected tax bills, and being used for green property upgrades from energy-saving retrofits to sustainable new builds. Even clients with cash are opting for bridging loans to free up funds for deposits across multiple projects.
"It’s no longer a ‘last resort’ but a strategic tool to bridge transitional periods, whether in the market, economy or personal circumstances," Jannels said. "Strong demand, paired with growing confidence from institutional investors, is fuelling this momentum.”
Boosting returns
UK-based specialist broker Alexander Hall is seeing more landlords leave the market, selling older properties often in need of refurbishment or failing standard mortgage criteria. Bridging loans are helping those buyers upgrade homes, convert them into HMOs or flats, and boost returns.
Angela Ellis, head of marketing at Alexander Hall, said there's also growing interest in converting commercial buildings to residential due to relaxed planning rules. With larger developers slowing, small and mid-size developers and new investors are stepping in, often driven by pension or investment concerns.
Steady interest rates and growing demand for land, development and new-build projects are prompting brokers to act quickly on short-term opportunities, but that doesn’t mean borrowing costs are no longer a concern.
“Interest rate sensitivity remains a major consideration, especially with the uncertain trajectory of base rates, given global and macro-economic circumstances," BDLA chair Jannels said. "Brokers are being proactive in stress-testing exit strategies, particularly where refinancing is the planned route."
The BDLA is seeing a heightened focus on client education and deal viability with brokers working closely with lenders to secure flexible terms and advising borrowers to have multiple exit strategies in place, so they’re not caught short if rates move before loans are repaid.
Raising the bar
The upswing in bridging finance is leading brokers to expand their teams, establish partnerships with firms that can handle additional capacity or quirkier cases, and build stronger, more diverse relationships with a wider range of lenders - giving them greater choice and flexibility when matching clients with the right bridging finance products.
“The best brokers are getting sharper on packaging – sending in detailed, accurate enquiries that include viable exit strategies from day one. This helps lenders underwrite quickly and efficiently," Jannels said.
Proactive communication, transparency, and anticipation of lender queries are all key differentiators in a competitive, fast-moving space. So who do the experts rate?
Ellis name-checked MT Finance, Masthaven, and Shawbrook for their service and flexibility, even if they may be slightly more expensive than their competitors. O’Neill considers Precise Mortgages the frontrunner for service, although he finds Market Harborough Building Society equally impressive for its flexibility with different client types including high net worth individuals.
Rate cuts
The speed and flexibility of bridging loans - with average approval times between three to 14 days - can make them ideal for unconventional, time-sensitive needs. They can also carry high risk though, as the loans are secured against a property or asset and failing to pay can be costly. Shopping around is crucial.
Costs vary depending on the lender, loan size, borrower profile, and term length. In addition to interest, borrowers usually pay arrangement fees of 1–4%, plus valuation, legal, and potential exit fees. Rates are coming down, however.
The specialist United Trust Bank (UTB), for example, has reduced interest rates on regulated and unregulated bridging loans at various LTVs, including reductions of up to 15bps on its unregulated second charge bridging loans. For loans up to 70% LTV, rates have reduced from 1.10% per month to 0.95% per month and for loans up to 60% rates have reduced by 10bps to 0.90% per month. Larger regulated and unregulated loans of £1.5m to £5m are now available up to 75% LTV at 0.75% per month and up to 70% LTV at 0.70% per month.
"We’re seeing more professionals and investors looking to add to their portfolios, or complete light and heavy refurbs to convert to higher yielding assets or buy and flip to realise profits relatively quickly," said Paula Purdy (pictured), UTB head of sales - bridging finance.
Meanwhile, specialist lender Together has launched a buy-to-let retention product range with reduced rates for landlords transitioning from bridging loans, or refinancing existing BTL deals. Rates have been cut by 25 basis points, with five-year fixed deals now starting at 6.89% for those opting for a 7% fee.
UTB and Together aren't alone in introducing rate cuts and product updates. From July 3, Virgin Money reduced fixed rates across purchase, buy-to-let, and product transfer ranges and at least three building societies – West Brom, Hinckley & Rugby, and Market Harborough – have introduced updates to their mortgage and bridging finance products.
The road ahead
Brokers are positive about H2 2025 and 2026.
KIS's O'Neill foresees a steady increase ahead, "There, of course, is a ceiling with everything but comparatively speaking - looking at other finance products - bridging is still a minor slice of the pie. Service, transaction volume, etc is all increasing and I don’t see that slowing down into 2026."
Jannels also predicts upward momentum, "We think there is still plenty of room for the market to continue its growth trajectory as more potential customers and brokers recognise and understand the potential uses of bridging finance."
