Alternatives to a Bridging Loan: What Else Could You Use?

I’m a bridging broker. I also arrange ordinary mortgages, which is why I can say this honestly: a lot of the people who ring me asking for a bridge don’t need one.

This is probably the only piece on this site that pushes you away from what I do. Stick with it anyway.

In this guide

A quick link to each alternative covered below:

• First question: why do you think you need a bridge?
• A further advance with your own lender
• A remortgage
• A second charge term mortgage
• Asset finance, or a business loan
• Unsecured borrowing, for small amounts
• A joint venture partner
• Vendor finance or a delayed completion
• Sell first, buy second
• So when is a bridge actually the right answer?
• When I say no
• Four questions to ask yourself before you ring anybody
• Tell your broker everything

First question: why do you think you need a bridge?

Before anything else, work out where the idea came from.

• An estate agent told you it’s a cash only purchase, or that the vendor wants a quick sale.
• An auctioneer told you. If it’s an auctioneer they’re probably right, but check their terms and how long you’ve really got.
• Somebody in the pub who did one once.
• Something you read, or something on TikTok or Instagram.

Bridging has become the in word. It sounds decisive. But how often is the person telling you actually right, and do their circumstances look anything like yours? I’ve dealt with hundreds of clients and no two situations have ever been the same.

A further advance with your own lender

This is the one most people have never heard of, which surprises me, because it’s often the cheapest answer. When I ask about it, the usual reply is “what’s a further advance?”, and that’s from people who’ve already spoken to other brokers.

You’ve got a mortgage with a high street lender. You ring them and say you need more. They run an affordability assessment. If your income’s gone up since you took the mortgage out, or you’ve cleared credit cards and loans since, you may be able to borrow more than you originally did.

Your original mortgage stays as the first charge and the extra sits on top. The rate won’t be the same as your main mortgage, but it won’t be a bridging rate either, and there are usually no legal costs to speak of.

The catch is that high street lenders only allow further advances for reasons they approve of. Putting money into a business usually isn’t one of them. Going to Vegas definitely isn’t. And if your income hasn’t moved, or you maxed out your borrowing at the start, the answer’s no.

A remortgage

The usual objection is the early repayment charge. That’s fair, but check the number rather than assuming it.

The comparison’s simple. What does the early repayment charge cost you, against what the bridge would cost you? If the charge is the smaller of the two, that’s your answer, and it takes ten minutes to work out.

The rate matters too, and it can cut both ways. I had clients who’d fixed during the turmoil around the 2022 mini budget, at a rate that looked painful a year later. They wanted money out of the property and wouldn’t consider a remortgage because of the early repayment charge. When we actually looked, the rate available to them was significantly lower than the one they were sitting on, and the saving over the following year more than covered the charge. They were going to spend money in order to save more money, and they hadn’t thought about it that way round.

A second charge term mortgage

Not a second charge bridge. A proper term second charge.

Ask yourself why you want it. If it’s speed, a bridge makes sense. If a lump of money’s coming in six months and you want to clear it then, a bridge makes sense. But a second charge term loan can be done in around six to eight weeks, so if you can wait two months you’ve got another option.

Here’s where it gets interesting. Say you’re three years into a five year fix on your main mortgage. Put a two year second charge term mortgage behind it and both products come up for renewal at roughly the same time, so you can remortgage the whole lot together. It has to line up precisely, but when it does it’s a much tidier answer than a bridge.

Asset finance, or a business loan

People come to me wanting a bridge to buy machinery. They’ve won a contract and they haven’t got the kit to deliver it.

We can bridge it if the money’s needed quickly. But have you looked at asset finance? Have you got a limited company we could put a business loan into instead? That’s a product designed for exactly this, and it may well work out cheaper.

Unsecured borrowing, for small amounts

I’m not going to tell anybody to go and use credit cards. That isn’t advice and it isn’t what this is about.

But I’ve turned people down who wanted a bridging loan of about ten thousand pounds, and I’d turn most down at fifteen or twenty too. On a loan that small the arrangement fee, the broker fee and the legals eat so much of it that the whole thing stops making sense. Securing a small sum against your home is a big step for something that could be handled another way.

A joint venture partner

Sometimes the gap is equity, not debt.

A solicitor contacted me once who wanted to buy a property. He had most of the money and needed more to complete it and do the works. He could’ve taken a second charge, or a bridge, or several other things. What he could also have done is find a partner, put the money in together, do the work, sell it and split the profit.

If you’re short of equity rather than short of time, a partner’s worth considering before a lender is.

Vendor finance or a delayed completion

More of a minefield, and it needs the right seller, but it exists.

I had a developer buying land for over a million. The vendor agreed to delay the contract, so he paid a portion up front, carried out the works, and paid the balance later out of what the project produced. There was still bridging in that structure, but the deal only worked because the seller was flexible.

Sell first, buy second

The least glamorous option here and sometimes the right one.

People tell me they’ve found their dream property but haven’t sold their own. That is a chain break and we can absolutely help with it. But is it your dream property, or is your heart running ahead of your head?

I was in exactly that position a couple of years ago. I needed to sell, I found a property I thought I wanted, and the timings wouldn’t line up. Could I have used quick finance to force it through? Probably. Would it have cost me? Yes. And it turned out it wasn’t my dream property after all. It was my head and my heart not talking to each other.

So when is a bridge actually the right answer?

Nearly always, it comes down to speed.

A second charge term mortgage isn’t as quick as a bridge. Asset finance isn’t as quick. A remortgage isn’t as quick. A further advance might be, but high street lenders can be picky and they attach a lot of conditions.

Beyond speed, bridging is the answer when a property is unlivable or unlettable, when no mainstream lender will touch it as it stands, or when you’re doing works to lift the value and need funding that understands that.

One more thing worth knowing, because it happens constantly. People buy a property, fund the works on credit cards and loans, and plan to pull the money back out afterwards. The property goes up in value, they go to the bank they’ve been with for thirty years expecting a warm welcome, and the bank runs a credit search, sees all that debt and declines them on debt to income. It doesn’t matter that the debt was for the property. They can’t prove it and they won’t lend.

When I say no

More often than people expect.

There’s no exit

Nearly everyone arrives with an exit. The trouble is it’s plausible in their own head rather than plausible to a lender, and those are two different tests. I want a plan A, and I’d rather have a plan B and a plan C as well.

The works have been underestimated

Somebody tells me the works are twenty thousand and the property will be worth two hundred thousand more at the end of it. How? I’m having my own kitchen and bathroom done at the moment and the bathroom alone is quoted at ten thousand minimum. So how’s a whole house being renovated for twenty?

There’s no real time pressure

I ask when it needs doing by and the answer’s six months. On a chain break I’ll ask when the person you’re buying from wants to complete, and more often than not nobody’s asked them. Then it turns out their sale’s going through probate and will take months anyway, so you could just sell your own property first and save the cost entirely.

One thing that never helps

Turning up with a list of demands before anyone’s looked at the case. This is what I want and this is what I won’t accept.

It’s a bit like a first date where somebody opens with the rules about holidays and Friday nights. We haven’t met yet.

Four questions to ask yourself before you ring anybody

• What’s my exit, and what happens if it’s late?
• Do I actually need the speed, or does it just feel urgent?
• Does the person selling to me need speed?
• What am I not telling the broker?

Tell your broker everything

That last question is the one that matters.

If you ring a broker and say you need bridging, you’ll get bridging. That’s what you asked for. If instead you describe the situation, what you own, what you owe, what you’re trying to do and by when, the whole thing gets looked at properly, and sometimes the answer’s something slower and cheaper that suits you better.

Warts and all. It’s the only way anyone can give you the right answer rather than the answer you asked for.

If you want that conversation, ring 0330 133 4442 or book a call. Twenty minutes, no credit check, and I’ll tell you if you don’t need me. Some months that’s the most useful thing I do.

Your property may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.

This is general information, not a quotation, an offer of finance or personalised advice. No lender is named. Rates, fees, timescales and lender criteria vary by lender and by deal, and the terms available to you may be different. Bridging finance is short-term secured borrowing and it can be expensive. If a secured loan is not repaid in line with its terms, the lender may take enforcement action against the property or any other security provided.