When a bridge can make sense
Bridges are typically used to buy quickly, to buy property a mainstream lender will not yet accept, to fund light works that will make a building mortgageable, or to release money while a sale or refinance is arranged. The common thread is a temporary gap with a clear end point.
- Buying at auction where the contract sets a completion date
- Buying an empty or tired building before letting or refurbishment
- Raising money against property while a longer-term facility is arranged
- Resolving a title or lease issue that blocks mainstream lending
Gross and net loan
Bridge quotes often distinguish the gross loan, which is the full debt secured on the property, from the net amount actually released to you. Arrangement fees and any interest deducted upfront come out of the gross figure. If you need a particular sum on completion day, work back from the net figure, not the headline.
Serviced, retained and rolled interest
Serviced interest is paid monthly from your own cash flow. Retained interest is calculated for the expected term and held back from the advance, so you receive less on day one. Rolled interest is added to the balance and repaid at the end, meaning interest can compound and the amount due on exit grows. Each structure changes how much you receive, how much you owe and what happens if repayment is late.
The exit carries the risk
A refinance is never guaranteed: valuations, lender appetite, your finances and the property can all change during the term. Sales can take longer or achieve less than hoped. Extensions, default interest and fees can escalate the debt. Lenders can enforce against the security, which may mean losing the property.
Hypothetical example, not a real client: an investor buys a vacant retail unit intending to let it, then refinance. If the letting takes longer than planned, the refinance may not be available and the bridge term may run out, so a realistic contingency matters before committing.
Questions to ask before signing a bridge
Bridge terms often hide their real cost in the detail rather than the headline. Ask the lender, through your broker, to set out in writing how much will reach your solicitor on completion, what the balance will be on the planned repayment date, and what the balance would be if repayment slipped by several months. Seeing those three figures side by side tends to reveal whether the plan is comfortable or fragile.
Check whether valuation and legal costs are payable even if the loan does not complete, and whether the lender can call for more security or reduce the advance after valuation. A bridge is a contract built around a deadline, so understanding the consequences of missing it is part of choosing it.
Your property may be repossessed if you do not keep up repayments on a loan secured on it. Sorbus Finance is a broker, not a lender. Finance is subject to lender criteria, status, valuation and affordability. We work with a panel of lenders, not the whole market, and do not promise a rate, fee level or outcome.