A-Z Glossary of Terms
A – D
Arrangement Fee
A setup charge from the lender, typically 1–2% of the loan amount.
Airspace Development Finance
A source of finance to develop the airspace above existing buildings, with no planning permission required
Auction Finance
A type of fast bridging loan used to buy properties at auction, where completion is usually required within 28 days.
Bridging Loan
A short-term loan used to “bridge” a financial gap — commonly between buying a new property and selling an existing one.
Bridging Loan Broker
A professional or company that helps find suitable bridging lenders and negotiates terms on your behalf.
Decision in Principle (DIP)
A non-binding pre-approval from a lender stating how much they may lend, subject to valuation and checks.
Default
Failure to meet the loan terms, usually through missed payments or not repaying by the end of the agreed term. Read what happens if you cannot repay your bridging loan.
Deposit
The amount of money or equity required upfront — usually at least 25–40%, depending on LTV and risk.
Development Finance
Specialised funding for large-scale property construction or conversions — more complex than standard bridging loans.
E – H
Exit Fees
A charge (commonly 1%) paid to the lender when you repay the loan — sometimes waived or built into the terms.
Exit Strategy
Your planned method for repaying the loan — usually through property sale, long-term refinancing, or asset sale.
First Charge Loan
A loan secured as the primary (first-ranking) debt on a property. The lender gets priority if repossession occurs.
Gross Loan
The total amount borrowed before deducting fees and interest — the opposite of a net loan.
I – L
Interest Rate
Typically charged monthly (0.5%–1.5%); can be rolled-up, retained, or serviced.
Interest Retained
Interest is deducted from the loan upfront, assuming a fixed loan term.
Loan-to-Value (LTV)
The loan amount expressed as a percentage of the property’s value. For example, a £500k loan on a £1M property = 50% LTV. Read what is the maximum LTV for a bridging loan.
Legal Fees
Costs for both your solicitor and the lender’s solicitor — typically £1,000–£3,000 combined.
M – P
Mezzanine Finance
A secondary loan used to top up main development finance — higher risk, higher cost, and usually secured with a second charge.
Monthly Interest
Bridging loans are quoted monthly (e.g. 1%/mo = 12%/yr), unlike traditional mortgages which use annual rates.
Net Loan
The actual amount you receive after fees and retained interest are deducted.
Non-Status Bridging Loan
A loan where the lender does not assess income or credit status — based more heavily on the asset and exit strategy.
Open Bridging Loan
No fixed repayment date, though a general timeframe is expected — gives more flexibility, but often costs more.
Planning Permission
Required for many types of property development — affects the value and loan viability.
Q – T
Quick Completion
A feature of bridging loans — funds can often be released in as little as 3–14 days.
Rebridge a Loan
Taking out a new bridging loan to repay an existing one, often due to delays in the original exit strategy.
Refinance a Bridging Loan
Replacing a bridging loan with a longer-term mortgage or another financial product.
Regulated Bridging Loan
A loan secured against a property that the borrower or their family will live in — regulated by the FCA.
Repossession
The lender taking legal action to seize and sell the property if you default and can’t repay the loan.
Second Charge Bridging Loan
A loan secured on a property that already has a mortgage or loan — lower priority, higher risk for the lender.
Serviced Interest
You pay interest monthly, like a mortgage, instead of rolling it up or retaining it.
U – Z
Title Deed
A legal document showing ownership of the property — essential for securing a loan.
Unregulated Bridging Loan
A loan secured on a commercial or investment property — not subject to FCA rules.
Valuation Report
An independent assessment of the property’s market value — determines the maximum loan amount.
Valuation Fee
The cost of obtaining the valuation — typically £300–£1,000+ depending on the property.
