How bridging loans work

A bridging loan is best thought of as a short term mortgage.

Like a mortgage, it's a loan that is "secured" against property. If you default on the loan the lender can use the property to get their money back.

Your bridging loan would usually be secured either on your exisiting property, the new one, or both of them.

The bridging loan would depend on a successful valuation of the relevant property. (The lender will get a professional valuer to confirm what the property is worth).

Lenders will normally advance a bridging loan of up to 65% of the property value, less any existing mortgages.

Roughly speaking this means if the property is worth £100,000 they will advance you up to £65,000 (ie 65%).

However this depends on the particular lender so you could get a better loan-to-value ratio..

A standard bridging loan would range between £25,000 to £500,000.

Again, depending on the lender, a bigger loan may be possible. If so, it may take longer to arrange.