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Glossary of Bridging Loan Terms

  • Agreement in Principle (AIP) — A conditional offer from a lender that indicates how much you may be able to borrow, subject to full application and checks.

  • Arrangement Fee — A fee charged by the lender to set up the loan, usually a percentage of the loan amount.

  • Auction Finance — A bridging loan arranged quickly to complete the purchase of a property bought at auction.

  • AVM (Automated Valuation Model) — A digital property valuation method, faster than a physical survey.

  • Bridging Loan — A short-term loan designed to bridge a gap in funding, often until a property is sold or longer-term finance is arranged.

  • Broker — An intermediary who helps you find and arrange the best finance option for your situation.

  • Completion — The final step of a property transaction when ownership transfers and funds are released.

  • Drawdown — The release of funds from a loan, often done in stages in development finance.

  • Early Repayment Charge (ERC) — A fee some lenders charge if you repay your loan before the agreed term.

  • Exit Strategy — The planned way you will repay your loan, such as by selling a property or refinancing.

  • FCA (Financial Conduct Authority) — The UK regulatory body overseeing regulated financial products.

  • First Charge Loan — A loan that takes priority over other debts secured against the same property.

  • Gross Loan — The total amount borrowed, including fees added to the loan.

  • Loan-to-Value (LTV) — The ratio of the loan amount to the value of the property, expressed as a percentage.

  • Net Loan — The amount actually released to you after deducting fees and interest if deducted upfront.

  • Open Market Value (OMV) — The estimated value of a property if sold on the open market.

  • Regulated Loan — A loan overseen by the FCA, typically secured against a borrower’s main residence.

  • Rolled-Up Interest — Interest that is added to the loan balance rather than paid monthly.

  • Term — The duration of the loan, usually 6–12 months for bridging loans.

  • Unregulated Loan — A loan not overseen by the FCA, usually for investment or business purposes.