Bridging Loan Agreement in Principle

A bridging loan agreement in principle is a lender's indicative terms — loan amount, loan-to-value, rate, fees and term — based on information about the property, purpose, exit and borrower, issued before valuation and legal checks. It is not a binding offer.

A bridging agreement in principle is usually issued within one to two working days of a complete enquiry, sometimes the same day, because it relies on the information provided rather than a valuation or legal work.

Many bridging agreements in principle involve a soft credit search or none, which does not create a hard-search footprint visible to other lenders. A hard search usually happens later, at full application, depending on the lender.

An agreement in principle is not a guarantee: the terms are subject to valuation, legal due diligence and confirmation of the exit. A lower valuation or a title issue can change the loan or the terms.

Simple, well-prepared bridging cases can complete in days, while others take several weeks, depending on the valuation, the solicitors and the complexity of the title and exit. Starting the legal work early saves time.

Bridging loans can complete within an auction's 28-day deadline when the agreement in principle is in place and the legal pack has been reviewed before the auction, and the valuation and legal work start immediately after the hammer falls.

Common delays include slow valuations, title problems, missing searches, leasehold enquiries, complex ownership structures and an exit that needs more evidence. Instructing experienced solicitors early, and gathering exit evidence before applying, reduces these delays.

You need a solicitor to act for you, and the lender instructs its own solicitor or uses a dual-representation panel firm. The solicitors check title, prepare the charge and confirm the lender's conditions before completion.

A valuation is usually required, carried out by a surveyor on the lender's panel. Some lenders use desktop or automated valuations for lower-risk, lower loan-to-value cases, which can shorten the timeline.

Valuation and legal fees are usually paid up front or during the process; the arrangement fee is usually deducted from the loan at completion; and any exit fee is paid on redemption. The agreement in principle sets out the fees.

Bridging lenders look mainly at the security — its value and type — and the exit — how the loan will be repaid — along with the borrower's identity, credit history, experience for investors, and the purpose of the loan.

A good credit score is not always required, because bridging lenders focus on the security and the exit. Adverse credit is considered case by case, though recent serious adverse credit can narrow choice or reduce the loan-to-value.

For unregulated bridging, lenders check income mainly where interest is serviced monthly or where the exit is a refinance that depends on income. For regulated bridging on your home, the lender assesses your repayment strategy.

Lenders accept exits such as the sale of the property, a refinance onto a mortgage, the sale of another asset, or other funds expected within the term, provided they are realistic and evidenced at application.

Limited companies, limited liability partnerships and some trusts can take out bridging loans, usually with personal guarantees from directors or members. The lender checks the structure and the people behind it.

Bridging loans commonly run for up to 12 to 24 months, with some lenders offering longer terms. The term is set to the exit, with time allowed for delays, because extending or re-bridging adds cost.

You usually need identification and proof of address, property details, evidence of the exit — such as a mortgage agreement in principle or agent's sale advice — a statement of assets and liabilities, and company documents if a company is borrowing.

You can often get a bridging agreement in principle with bad credit, because lenders focus on the security and exit. The adverse credit is disclosed upfront, and the lender reflects it in the terms.

A regulated bridging loan is secured on a property that the borrower or a related person lives in, or will live in, and is regulated by the Financial Conduct Authority (FCA) under its Mortgage Conduct of Business (MCOB) rules, including a requirement for a credible repayment strategy.

After accepting the agreement in principle, you pay for the valuation, solicitors are instructed, the lender underwrites the case and the exit, and once the valuation and legal checks are satisfactory, a formal offer is issued and the loan completes.