Bridging loans for hospitality: what they are, and when they earn their cost
A bridging loan is fast, short-term, secured finance for a gap. This guide explains what one is, when it earns its higher cost in hospitality, and why the exit matters more than anything else.
A bridging loan is a short-term loan secured against property, arranged quickly and usually repaid within 12 to 24 months, used to bridge a gap until a longer-term exit is in place. In hospitality it funds buying at speed or at auction, buying a closed or unmortgageable pub or hotel, refurbishing and repositioning a tired asset, or breaking a chain, then it is repaid by refinancing onto a commercial mortgage or by a sale. It is more expensive than a mortgage, priced monthly rather than annually, so it earns its cost only when speed or a temporary situation justifies it, and the exit must be clear from day one. Regulated where secured on the borrower's home, otherwise unregulated. We arrange bridging; we do not lend.
At a glance
- What it isShort-term secured finance for a gap
- Typical term12 to 24 months
- Used forSpeed, auctions, repositioning, unmortgageable assets
- PricedMonthly, higher than a mortgage
- Repaid byRefinance onto a term loan, or sale
- MarketUK bridging book 13.7 billion pounds (BDLA, Q3 2025)
What a bridging loan is
A bridging loan is a short-term loan secured against property, arranged quickly and designed to be repaid within a short window, usually 12 to 24 months, once a longer-term exit is in place. It bridges a gap: the time between needing the money now and having the permanent finance or the sale that repays it. Interest is usually rolled up or retained rather than paid monthly, which protects cash flow while the situation resolves, and the loan is repaid in full at the end from the exit. Our bridging service sits at /services/bridging-finance/.
The bridging market is deep and active. The BDLA put the UK bridging and development loan book at a record 13.7 billion pounds as at Q3 2025, easing slightly to 13.4 billion pounds in Q4 2025, with 11.7 billion pounds of applications in Q4 2025, which it frames as evidence of demand for short-term and exit finance. Most bridging is unregulated commercial lending, but a bridge secured on the borrower's own home is regulated, and we refer those cases to an FCA-authorised firm.
When bridging earns its cost in hospitality
Bridging is more expensive than a mortgage, so it only makes sense when speed or a temporary situation justifies the cost. In hospitality there are a handful of classic cases where it does. Buying at auction or in a competitive situation needs money faster than a mortgage can move. A closed or run-down pub or hotel with no current trade cannot be mortgaged, because there is no going concern to value, so it is bought with bridging, reopened and traded up, then refinanced. Repositioning a tired asset, or breaking a chain to secure a site, are the same idea.
- Buying at speed or at auction, where a mortgage cannot complete in time
- Buying a closed or unmortgageable pub or hotel with no current trade to value
- Refurbishing and repositioning a tired asset to lift its trade and value
- Breaking a chain or bridging a sale to secure a site before funds arrive
- Funding a planning or change-of-use uplift before a term refinance
In each, the plan is the same: use bridging to get the asset and improve it, then refinance onto a commercial mortgage once the trade or the works prove out, as covered at /guides/how-to-buy-a-pub/ and /services/refinancing/.
What bridging costs
Bridging is priced monthly, not annually, which is what makes it feel expensive: a monthly rate that looks small annualises to well above a mortgage. On top of the interest sit an arrangement fee, valuation and legal costs, and sometimes an exit fee. Because the interest is usually rolled up, the balance grows over the term, so the longer the bridge runs, the more it costs. The discipline is to keep the term as short as the plan realistically allows and to have the exit lined up, not hoped for.
| Cost | How it works |
|---|---|
| Interest | Charged monthly, usually rolled up to the exit |
| Arrangement fee | Commonly a percentage of the loan, added to the facility |
| Valuation and legals | Paid up front, both sides on commercial lending |
| Exit fee | Charged by some lenders on repayment |
| Term discipline | The shorter the bridge, the lower the total cost |
The exit is everything
The most important thing about any bridging loan is the exit: how it will be repaid. A bridge with no clear exit is dangerous, because the loan falls due whether or not the plan has worked, and rolled interest keeps growing. The two normal exits in hospitality are a refinance onto a commercial mortgage once the asset is trading or the works are done, or a sale of the asset. The exit must be realistic from day one, which is why we agree the take-out before the bridge completes rather than leaving it to chance.
Bridging is a precise tool, not a cheap one, and the commentary that it is expensive and needs a clear exit is correct. Used well, for speed or to unlock an asset a mortgage cannot touch, it earns its cost many times over. Used to paper over a deal that does not work or an exit that is not real, it compounds the problem. We only arrange it where the exit is genuine and the cost is justified.
How we arrange bridging
We size the bridge against the asset and the works, structure the interest so it protects cash flow, and, crucially, agree the exit before the bridge completes, whether that is a refinance onto a commercial mortgage or a sale. We keep the term as short as the plan allows to control the cost, and we place the facility with a lender whose speed and appetite fit. We are an arranger, not a lender, and Matt Lenzie takes every case to market personally. See /services/bridging-finance/ and the refinance route at /services/refinancing/.
Bridging loans for hospitality: what they are, and when they earn their cost: common questions
What is a bridging loan and how does it work?
A bridging loan is a short-term loan secured against property, arranged quickly and usually repaid within 12 to 24 months once a longer-term exit is in place. Interest is often rolled up rather than paid monthly, protecting cash flow, and the loan is repaid in full at the end from a refinance or a sale. It bridges the gap between needing money now and having permanent finance.
What are the downsides of a bridging loan?
It is more expensive than a mortgage, priced monthly so it annualises high, and the rolled interest grows the balance over the term. Its biggest risk is the exit: if the refinance or sale that repays it does not happen, the loan still falls due. Used with a clear, realistic exit and a short term it is a precise tool; used without one it compounds a problem.
What does Martin Lewis say about bridging loans?
The widely repeated consumer view, associated with commentators like Martin Lewis, is that bridging loans are expensive and risky and should only be used with a clear exit plan and after considering alternatives. That is sound. Bridging earns its cost only when speed or a temporary situation justifies it and the exit is genuine, which is exactly how we arrange it.
What is the minimum deposit for a bridging loan?
Bridging is sized on the property value and the loan to value the lender will support, often up to around 70 to 75 percent of value, so the borrower funds the balance. Where works are involved, the lender looks at the value after the works too. There is no single minimum; it depends on the asset, the exit and the lender. Figures vary by lender and case.
Can I use a bridging loan to buy a closed pub or hotel?
Yes, and it is one of the classic uses. A closed or run-down pub or hotel with no current trade cannot be mortgaged, because there is no going concern to value, so it is bought with bridging, reopened and traded up, then refinanced onto a commercial mortgage once the accounts prove the trade. The exit refinance should be planned before the bridge completes.
How quickly can a bridging loan complete?
Bridging is built for speed and can complete in a couple of weeks, sometimes faster, where the valuation and legals move quickly and the title is clean. That speed is much of the point, letting a buyer act at auction or beat a competitor. A complex title, a licensing issue or a slow valuation extends it, so preparing the information early keeps it fast.
Is a bridging loan regulated?
A bridging loan secured against the borrower's own home is regulated and must be arranged by an FCA-authorised firm, which is where we refer those cases. Bridging secured against commercial or investment property, which covers most hospitality bridging, is unregulated commercial lending that we arrange directly. We establish which applies at the outset.
Ready to take a deal to market?
Send us the scheme and the numbers and we will come back with a view on fundability and likely terms within one working day.