Bridging finance for distressed property

Why speed matters when a deal looks distressed

Distressed property opportunities rarely wait. Auction clocks tick, sellers under pressure want certainty, and conventional mortgages often stall on condition, valuation, or timing. That is where bridging finance earns its place. It is a short-term loan designed to move as quickly as the transaction demands, allowing you to buy, stabilise, and then refinance or sell.

Across the UK, bridging has moved from niche to mainstream. In 2024, it accounted for a striking 41% of property transactions, reflecting how landlords, investors, and developers are navigating a market shaped by tighter mortgage appetites and time-sensitive opportunities. Unregulated loans for commercial and investment purposes rose strongly, while residential demand climbed as chains faltered. Chain breaks now drive around 23% of bridging, up from earlier in 2024, a practical response to a market where one in four chains can collapse and rack up needless fees.

The momentum has continued into 2025. Completions reached roughly £2.8 billion in the first quarter, with applications up sharply year on year and annual volumes tracking towards £12 billion. Developers are leaning in too, with bridging now making up over a third of their funding. This shift is rooted in pragmatism: average completion timelines from offer sit at about 43 days, materially faster than standard mortgages. Typical loan-to-value sits near 53%, with competitive monthly pricing around 0.64%, giving buyers the runway to acquire, refurbish, and exit efficiently.

Understanding APR is not just about percentages - it is about what you will pay in real terms and how quickly you can move. For distressed assets, the right broker and the right lender make the difference between landing a discounted deal and missing out. With tech-enabled processes, desktop valuations where suitable, and clear exit planning, bridging can be the funding tool that turns urgency into opportunity.

In a volatile market, certainty of funds is often worth more than a slightly lower rate.

Who stands to benefit most

If you are considering a distressed purchase - from auction stock to unmortgageable properties needing essential works - bridging can provide the immediate capital to buy and improve before refinancing. Portfolio landlords seeking quick completion, SME developers tackling light to medium refurbishments, and movers facing a chain break can all use bridging to secure a deadline-driven transaction. Buyers in competitive regions, from London to the North, often find that speed trumps headline price. And for residential movers, regulated bridging can be a practical solution to keep plans on track while mainstream lenders take longer decisions.

Ways to structure your finance

1. Regulated bridging for chain breaks and onward purchases

2. Unregulated bridging for investment, auction, or commercial assets

3. Light refurbishment bridging for non-structural works pre-refinance

4. Heavy refurbishment or development-bridge with staged drawdowns

5. Bridge-to-let products for a seamless refinance onto BTL

6. Auction finance with pre-approved limits for 28-day completions

Costs, timelines, returns, and risks at a glance

Who qualifies and what lenders look for

Eligibility depends on your use case and the property itself. For regulated bridging on a home you live in or will occupy, lenders must follow FCA rules, including enhanced affordability checks and clear verification of your exit strategy. Expect scrutiny of income where relevant, household spending, and the plausibility of your timeline to sell or refinance. For unregulated bridging on investment or commercial assets, lenders focus on experience, the asset’s condition, the works schedule, and how the project repays within the term. In both cases, a credible exit is essential. Sale remains common, but refinance is increasingly preferred as purchase activity rises. Typical leverage sits near the low to mid-50s LTV, with potential uplifts for stronger borrowers and properties in liquid locations. Desktop or drive-by valuations may be used to accelerate completion when appropriate, though full valuations are common for complex assets. As a UK-based retail finance broker, Kandoo can help match your circumstances with specialist lenders that favour your specific asset type, region, and project profile, minimising delays that often hinder distressed deals.

From offer to drawdown - the practical steps

1. Share the property details, timeline, and planned exit strategy

2. Obtain heads of terms and agree the indicative structure

3. Instruct valuation and legal work with clear target dates

4. Finalise documents, evidence affordability where required

5. Satisfy conditions, confirm works schedule and insurance

6. Receive formal offer and sign loan agreement

7. Funds complete to solicitor, then drawdown on completion

8. Begin works or sale preparation, monitor costs and milestones

Advantages and trade-offs to weigh

Read this before you commit

Bridging suits clear, time-bound plans. Before proceeding, stress-test your exit against higher rates, longer sales periods, and potential down-valuations. Obtain realistic comparables and confirm build costs with contingencies. If you plan to refinance, check that the post-works product criteria match your income, tenancy, and valuation assumptions. Where the loan is regulated, expect more detailed affordability checks that protect consumers but can add steps to the process. Experienced conveyancers and valuers who understand rapid transactions can remove friction. Finally, ensure you have liquidity for interest, fees, and overruns so you are never forced to sell at the wrong time.

Alternative routes if a bridge is not right

1. Vendor finance or delayed completion agreements

2. Joint venture equity for heavy works or planning risk

3. Refurbishment buy-to-let with advance stage releases

4. Secured business loan for capex on trading properties

5. Second charge on existing assets to lower upfront equity

Frequently asked questions

Q: How fast can a bridging loan complete? A: Typical completions are near 43 days from offer. With clean legals, responsive valuers, and straightforward titles, some cases can be faster.

Q: What rates should I budget? A: Many borrowers see around 0.64% per month, plus arrangement, legal, valuation, and broker fees. Your leverage, asset type, and experience influence pricing.

Q: Is regulated or unregulated right for me? A: If the loan is secured on a home you live in or will occupy, it is regulated and requires affordability checks. Investment and commercial deals are generally unregulated.

Q: What are typical exit strategies? A: Sale and refinance are the main routes. While sale remains common, refinance is increasingly popular as purchase activity grows in 2025.

Q: How much can I borrow against value? A: Average LTVs sit around 52-55%. Some lenders offer higher with strong assets and experienced borrowers, often with tighter conditions.

Q: Why are developers using bridging more? A: Developers face tighter mortgage lending and planning delays. Bridging now makes up over a third of their funding, providing speed and flexibility.

How Kandoo can help

Kandoo is a UK-based retail finance broker that connects you to specialist bridging lenders across the country. We help structure the right loan size, rate, and term for your distressed or time-sensitive purchase, aligning the exit with your works and market timelines. Speak to us for a tailored outline and fast decisions that keep your deal moving.

Important information

This guide is for information only and does not constitute financial advice. Bridging loans are secured against property and your asset may be at risk if you do not keep up repayments. Always seek personalised advice from a qualified professional.