Bridging Loans Explained

Bridging Loans Explained | Hylands Capital Bridging Loans Explained: A Simple Guide for UK Businesses

The short answer

A bridging loan is short-term, secured finance (typically 1 to 18 months) designed to “bridge” a gap until longer-term funding, a sale or another cash inflow comes through. It's priced and approved for speed, not for the long term.

Common reasons businesses use one

• Buying a property before the sale of another completes
• Purchasing at auction, where completion deadlines are tight
• Funding a refurbishment before refinancing onto a term mortgage
• Covering a short-term cash flow gap secured against an asset

Open vs closed bridging

• Closed bridge: you have a confirmed exit date and route (e.g. a sale already exchanged)
• Open bridge: no fixed exit date yet, which usually means a higher rate to reflect the added risk

What it costs

Bridging is priced monthly rather than annually (often 0.5%–1.5% per month) plus an arrangement fee and sometimes an exit fee. It's more expensive than a standard term loan, which is exactly why the exit strategy matters more than almost anything else.

The single most important question

Before taking a bridging loan, know precisely how you'll repay it. Lenders will ask the same question, and a vague answer is the most common reason applications stall.

How Hylands Capital helps

We compare bridging lenders on speed, rate and flexibility, and help you stress-test the exit plan before you commit, so the loan does its job without becoming a problem of its own.