buy before you sell bridging loans

What is a buy before you sell bridging loan?

A buy before you sell bridging loan is short-term regulated finance secured against your existing property that funds the purchase of a new home. You own both properties simultaneously for a short period. Once your existing property sells, the bridge is repaid from the sale proceeds.

This structure is attractive because it gives you certainty. You can complete the new purchase without waiting for your existing home to sell, avoiding the risk of the new property being snapped up by another buyer or the risk of falling into a property chain. You move into the new home immediately, then manage the sale of the old property at a sensible pace.

The bridge is regulated under MCOB because you occupy the new property as your main residence. The lender carries out affordability assessment to ensure you can service the bridge interest payments. Maximum term is typically 12 months on a standard regulated bridge, reflecting the expectation that your existing property will sell within that timeframe. If it takes longer, you will need to refinance onto a longer-term mortgage on the new property.

How it works

The process is simple. You identify and make an offer on a new property you want to buy. Simultaneously, you instruct us to arrange a buy before you sell bridge secured against your existing home. We arrange a valuation of the existing property and an affordability assessment. You accept a terms in principal within 24 to 48 hours.

We then proceed to legal exchange and completion. Your solicitor arranges searches and title review on both the existing property (which secures the bridge) and the new property (which you are buying). The bridge lender takes a first or second charge over the existing property, depending on any existing mortgage.

On completion day, the bridge funds are released to your solicitor. You complete the purchase of the new property and move in. Your existing property is listed for sale. As it stands on the open market, you manage viewings and negotiate an offer in the normal way.

Once your existing property sells and completes, the sale proceeds are paid to your solicitor. The bridge is repaid in full from these proceeds, your existing mortgage is discharged (if you had one), and you are left with the new property unencumbered, minus any closing costs. If the sale price is higher than the bridge and costs, you receive the difference.

Who it suits

Buy before you sell bridging suits property movers in several situations. Upsizers who have found their dream home and want to buy it without risk of chain breakdown. Downsizers who want a specific smaller property but need time to sell their larger existing home. Anyone who has found a property in a competitive market and wants to complete quickly to secure it before another buyer does.

It also suits people relocating for a job or personal reasons who have already identified where they want to live but whose existing property has not yet sold. Time-critical moves, where you need to be in a new property by a specific date, benefit from the certainty of bridging. And it suits anyone who simply prefers not to be in a property chain, avoiding the risk of the entire transaction falling apart if another chain member pulls out.

Bridging is less suitable if you are selling a property in a weak market where sale timelines are uncertain. If your existing property is likely to take significantly longer than 12 months to sell, bridging costs may outweigh the benefits of buying before you sell, and you should consider other options.

FCA regulation and what it means for you

Buy before you sell bridging is regulated under FCA Mortgages: Conduct of Business rules (MCOB) because you occupy the new property as your main residence. This means the lender must treat you fairly and provide standard consumer protections.

The lender carries out affordability assessment, reviewing your income, outgoings, and ability to service bridge interest payments until sale of your existing property. The assessment considers various scenarios, such as what happens if the sale takes slightly longer than projected or if the sale price is lower than expected. This is different from unregulated bridging (for buy-to-let or commercial property), where affordability assessment does not apply.

Regulated bridging carries standard mortgage protections including information on interest rates, early repayment options, and the right to cancel. You will receive a mortgage illustration showing the total cost of borrowing and an estimate of monthly payments (though with bridging, interest is typically rolled up rather than serviced monthly).

Maximum term under MCOB is typically 12 months on a standard regulated bridge. This reflects the expectation that your existing property will sell within this period. If it has not sold after 12 months, you will need to refinance the bridge as a longer-term mortgage on the new property, taking away the second charge on the existing property and assuming a new interest rate and terms.

That twelve month expectation is the standard position, not a hard cap. If you meet the FCA high net worth definition, which is annual net income of at least £300,000 or net assets of at least £3,000,000, specialist lenders and private banks can write regulated terms of up to 60 months. We have arranged several regulated bridging facilities on five year terms. The detail is in our guide to extended term regulated bridging loans.

We ensure you understand the costs, risks, and terms before you commit.

LTV and how much you can borrow

A buy before you sell bridge is typically offered at 70 to 75% of the equity in your existing property. Equity is the property value minus any outstanding mortgage debt.

If your existing property is valued at £500,000 and you have a £200,000 mortgage remaining, your equity is £300,000. At 75% LTV, you can borrow £225,000. If you have no mortgage on the existing property, the calculation is simpler. A £400,000 property with no mortgage gives you 75% of £400,000, which is £300,000.

The minimum loan from FD Commercial is £250,000. If your existing property equity does not support this minimum, bridging may not be available unless we can structure the facility differently.

In addition to LTV, the lender assesses affordability. Even if your property equity supports a larger bridge amount, affordability assessment may limit you to a lower facility based on your income and ability to service interest. This is part of MCOB regulation and is intended to protect you from over-borrowing.

The amount you can borrow is also influenced by the purchase price of the new property. Lenders typically will not bridge more than needed to complete the purchase. If you are buying a property for £350,000 and your existing property equity supports a bridge of £500,000, the lender may only offer a facility of £350,000 (or slightly higher if you want funds for costs). This is because the bridge exit is tied to the sale of your existing property, not the value of the new one.

Rates, costs and interest structure

Buy before you sell bridging rates typically range from 0.55% to 0.75% per month (indicative), depending on LTV, location, and borrower profile. These are higher than traditional mortgages, which reflects the short-term nature and asset-backed underwriting model. Rates are set after affordability assessment and individual underwriting.

Interest is typically rolled up, meaning it is added to the loan balance monthly and you do not make monthly payments. This is convenient for bridge borrowers, who are in transition and do not want to budget for separate monthly bridge payments while also managing the new property. The accrued interest is repaid when the bridge is settled from the existing property sale proceeds.

Arrangement fees charged by the lender are typically 0.5 to 1.5% of the loan amount, but may be added to the facility or deducted at drawdown depending on the lender. A £250,000 bridge with a 1% arrangement fee incurs £2,500 in lender fees.

Valuation costs for the existing property are typically £500 to £1,000. Legal fees are payable to both your solicitor and the lender's solicitor, usually £800 to £1,500 each side. Search and survey costs may apply.

Total borrowing cost over a 6-month bridge at 0.65% monthly with rolled-up interest and 1% arrangement fee would be approximately 4 to 5% of the loan amount. This is higher than a traditional mortgage but reflects the short-term facility and certainty of completing on the property you want without chain risk.

What happens if my existing property takes longer to sell?

Most existing properties sell within 12 months, and your bridging term is set at 12 months to accommodate typical timelines. However, if your property is still for sale after 12 months, the lender may agree to extend the bridge for a further period, subject to reassessment of the property value and sale progress.

Alternatively, you will need to refinance the bridge as a longer-term mortgage on the new property. This means the second charge against the existing property is discharged, and you take a new mortgage on the new property, removing the bridge structure entirely. Interest rates on long-term mortgages are lower than bridging rates, so refinancing usually results in lower costs if the sale extends beyond 12 months.

To minimise this risk, we recommend you are realistic about your existing property's market position when applying. If it is in a weak area or poor condition, or if comparable properties are taking 18 to 24 months to sell, you should factor this into your expectations. We can discuss contingency planning if sale timelines are uncertain.

Some lenders accept contingent use of rental income from the existing property as a temporary exit strategy. If you decide to rent out your existing property rather than sell it, some bridging lenders will allow the bridge to be repaid from rental income as it is received. This requires prior agreement with the lender and typically only works if the property generates significant rental income relative to the bridge balance.

Buy before you sell vs chain break bridging

Both buy before you sell and chain break bridging are regulated mortgages for residential owner-occupiers. The key difference is timing and planning.

Buy before you sell is proactive. You identify a new property you want to buy, then arrange a bridge to complete that purchase while your existing home is still for sale. You have time to market your existing property, negotiate offers, and complete the sale at a sensible pace. The entire transaction is planned in advance.

Chain break is reactive. Your sale falls through at the last moment, or your chain is broken by another party, and you risk losing the property you want to buy. You arrange an emergency bridge to complete on the committed purchase while you remarket and resell your existing property. Chain break bridging is the same product as buy before you sell, but arranged under time pressure and often with less certainty about the sale timeline of the existing property.

Both use the same regulatory framework and similar structures. The main difference is urgency. Buy before you sell suits planners and people who value certainty. Chain break bridging suits people in a time-critical situation who need to act fast. Both are available from FD Commercial.

The bridging process at FD Commercial

Our process is designed for speed and clarity. Initial enquiry typically takes 10 minutes. We ask about your existing property (value, mortgage, location, condition), the new property (address, price, purchase date if agreed), and your timeline for selling the existing home.

If we can help, we provide indicative terms. You then complete a formal application, providing details of both properties, your income and outgoings, and your exit strategy. We arrange a valuation of the existing property, which typically takes 3 to 5 working days.

Once the valuation and affordability assessment are complete, we issue a terms in principal within 24 to 48 hours. This sets out the loan amount, LTV, term (up to 12 months), rate, arrangement fee, and any conditions. You review this, ask any questions, and confirm you wish to proceed.

We then move to formal application. Your solicitor is instructed. The lender's solicitor reviews the title of the existing property (to take security) and the new property (to confirm you are buying it). Searches and reports are ordered. We manage the entire process behind the scenes.

On completion, the bridge funds the new property purchase. You complete the new property purchase and move in. Your existing property is listed for sale. Throughout the bridge period, we remain your point of contact. When your existing property sells, we coordinate the settlement, ensuring the bridge is repaid and your finances are properly wound up.

Total time from enquiry to drawdown is typically 5 to 14 days for standard cases.

Frequently asked questions