Types of Bridging Loan

🧩 What Are the Different Types of Bridging Loans?

Not all bridging loans are the same. Depending on your situation, different structures offer different levels of risk, repayment options, and flexibility. Understanding the types of bridging loans helps you choose the most suitable one for your financial needs.

1️⃣ Open Bridging Loans

No fixed repayment date, though lenders typically expect repayment within 6-12 months.

• Ideal if you're waiting on a sale or unsure of timings.

• Higher risk to lenders = possibly higher interest rates.

Best for: People who haven’t yet exchanged contracts or finalized a sale.

2️⃣ Closed Bridging Loans

Have a fixed repayment date—usually tied to a known event (e.g. property sale, mortgage offer).

• Lower risk to lenders, so typically lower interest rates.

• Requires a clear, documented exit strategy.

Best for: Borrowers with a confirmed timeline, like an exchange date already set.

3️⃣ First Charge Bridging Loans

The lender has primary legal claim over the asset if the borrower defaults.

• Often required when there’s no existing mortgage on the property.

• Typically lower risk for the lender = better rates.

Best for: Those using unencumbered property or refinancing without existing debt.

4️⃣ Second Charge Bridging Loans

The lender’s claim is second to an existing mortgage.

• Slightly riskier = often higher interest rates.

• Only an option if you already have a mortgage in place.

Best for: Leveraging equity without remortgaging.

5️⃣ Residential Bridging Loans

Used to purchase, renovate, or refinance residential property.

• FCA regulated (if it's for personal use)

• Can be used for downsizing, inheritance tax, chain breaks

Best for: Homeowners and landlords

6️⃣ Commercial Bridging Loans

Secured against commercial properties, including shops, offices, or mixed-use buildings.

• Higher LTVs and more complex underwriting

• May not be regulated

Best for: Business owners and commercial investors

7️⃣ Development Bridging Loans

For financing construction or renovation before long-term development finance kicks in.

• Used by property developers

• Can cover land purchases or build costs

Best for: Flipping properties, conversions, and heavy refurbishments

🧠 Tip from the Experts

🎯 “Choosing the right type of bridging loan is about risk tolerance, exit certainty, and your speed of need. The more prepared you are, the better deal you’ll get.”

🚀 Next Steps

Ready to explore how these loans compare to traditional financing? let's dive into Bridging Loans vs. Traditional Loans.