What are the common pitfalls in getting a bridging loan?
7th August 2025
By Simon Carr
What are the common pitfalls in getting a bridging loan?
Bridging loans can be a swift solution for funding gaps. However, not knowing the pitfalls of a bridging loan, can lead to financial strain. This guide will help you spot and avoid common pitfalls in securing a bridging loan in the UK.
Lack of Understanding of Loan Terms
One major pitfall is not fully understanding the loan terms. Bridging loans often have different terms from standard loans. They may include higher interest rates and fees. It’s vital to know these terms before you agree to the loan.
Always ask to clarify terms. Check how interest is charged and what happens if you repay early. This can save you from unexpected costs.
Not quite what you are looking for? Try these:
Underestimating Total Costs – perhaps the most common of pitfalls when considering a bridging loan
Many borrowers fail to account for all costs associated with bridging loans. These can include admin fees, legal fees, and broker fees, in addition to interest.
Before taking out a loan, make a detailed list of all potential costs. This will help you see if the loan is affordable and worth it.
Over-Reliance on Future Sales
A common mistake is relying too heavily on future sales to repay the loan. If these sales fall through, or are delayed, it can lead to financial issues.
To avoid this, have a clear and realistic exit strategy before getting the loan. Consider multiple repayment options to cover your bases.
Not Shopping Around
Another pitfall is not shopping around for the best deal. Different lenders offer different terms and rates.
Promise Money is able to compare options from various lenders. Looking at the terms, rates, and fees. They will help you find the best deal for your needs.
Poor Financial Planning
Poor planning can lead to issues in repaying the loan. It’s crucial to assess your financial situation thoroughly before taking out a bridging loan.
Ensure that you have a solid plan for repayment. Consider how you’ll manage the loan alongside your other financial responsibilities.
People Also Asked
What is a bridging loan?
A bridging loan is a type of short-term loan. It’s often used in property purchased to cover costs while waiting for a sale to complete.
How quickly can I get a bridging loan?
You can often get a bridging loan within a few weeks. This makes it a good option for urgent financial needs.
Are there alternatives to bridging loans?
Yes, there are alternatives like personal loans or extending your mortgage. Each has its pros and cons depending on your situation.
Can I repay a bridging loan early?
Yes, many bridging loans allow early repayment. However, check if there are any fees associated with this.
What happens if I can’t repay the bridging loan?
If you can’t repay the loan, the lender may take legal action. They could also take possession of any property used as security for the loan.
What are the other common pitfalls of a bridging loan?
Please check out our youtube playlist for more answers and explanations on all things bridging.
Why choose Promise Money?
Promise Money’s reputation is built on 30 years of experience, honesty, integrity, doing our very best for our customers – proud to offer old fashioned values with modern efficiency.
Promise Money is a broker not a lender. Therefore we offer lenders representing the whole of market for mortgages, secured loans, bridging finance, commercial mortgages and development finance. These loans are secured on property and subject to the borrowers status. We may receive commissions that will vary depending on the lender, product, or other permissable factors. The nature of any commission will be confirmed to you before you proceed.
More than 50% of borrowers receive offers better than our representative examples
The %APR rate you will be offered is dependent on your personal circumstances.
Mortgages and Remortgages
Representative example
Borrow £270,000 over 300 months at 7.1% APRC representative at a fixed rate of 4.79% for 60 months at £1,539.39 per month and thereafter 240 instalments of £2050.55 at 8.49% or the lender’s current variable rate at the time. The total charge for credit is £317,807.66 which includes £2,500 advice / processing fees and £125 application fee. Total repayable £587,807.66
Secured / Second Charge Loans
Representative example
Borrow £62,000 over 180 months at 9.9% APRC representative at a fixed rate of 7.85% for 60 months at £622.09 per month and thereafter 120 instalments of £667.54 at 9.49% or the lender’s current variable rate at the time. The total charge for credit is £55,730.20 which includes £2,660 advice / processing fees and £125 application fee. Total repayable £117,730.20
Unsecured Loans
Representative example
Annual Interest Rate (fixed) is 49.7% p.a. with a Representative 49.7% APR, based on borrowing £5,000 and repaying this over 36 monthly repayments. Monthly repayment is £243.57 with a total amount repayable of £8,768.52 which includes the total interest repayable of £3,768.52.
THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME
REPAYING YOUR DEBTS OVER A LONGER PERIOD CAN REDUCE YOUR PAYMENTS BUT COULD INCREASE THE TOTAL INTEREST YOU PAY. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.
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