Bridging Loans & Development Funding — Independent Legal Advice
ILA for bridging finance, development loans, debentures and deeds of subordination — same-day appointments nationwide
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Same-Day Video Appointments
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150+ Bridging Lenders Covered
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SRA Regulated
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Fixed Fee from £150 + VAT
✔ Online
Poppy LLB
Solicitor
✔ Online
Zain
Solicitor
✔ Online
Mohsin
Solicitor
How Can We Help You?
Please supply us with:
- Your bridging loan offer or facility letter
- Any personal guarantee, debenture or deed of subordination
- Details of the underlying property security
- Names of all directors/borrowers party to the facility
- Contact details of the lender's solicitor
- Your preferred appointment time
Bridging loans are short-term, high-interest secured loans used to fund property purchases or developments where conventional mortgage finance is not appropriate or available in the required timescale. They are typically advanced for periods of 6–18 months at higher interest rates than standard mortgages, with interest commonly rolled up (added to the balance) rather than paid monthly.
Because bridging finance carries significantly higher risks than standard mortgage lending — high cost, short term, often with multiple layers of security — almost every UK bridging lender requires Independent Legal Advice for the borrower and any guarantors before completion. This is partly to comply with the principles in Royal Bank of Scotland v Etridge (No 2) [2001] and partly to ensure the lender's security cannot be successfully challenged later. We provide same-day ILA for bridging transactions of all sizes, from £150 + VAT.
When Bridging ILA Is Required
Bridging transactions often involve several different legal documents — and ILA may be required on any or all of them. We see ILA needed most commonly in these scenarios.
Documents That Typically Require ILA in Bridging Transactions
- Director's Personal Guarantee — director(s) personally guaranteeing the company's bridging facility
- Deed of Guarantee and Indemnity — broader than a simple guarantee, creating both secondary and primary liability
- Deed of Subordination — subordinating other creditors (often the directors themselves) to the bridging lender's priority
- Company Debenture — fixed and floating charges over all of the company's assets
- Third-party charge — security over a property owned by someone other than the borrower (typically a director's home)
- Cross-collateralisation — security over multiple properties for a single facility
- Occupier's consent — where the security property has non-owning adult occupiers
What We Cover in Your ILA Appointment
1. The Headline Cost of the Facility
Bridging interest rates appear in many different formats — monthly, quarterly, annual, gross, net, retained, rolled-up, serviced — and the headline rate can disguise the true cost. We will calculate the all-in cost of the facility including arrangement fees, exit fees, broker fees, valuation costs, legal costs and rolled-up interest. The total can be substantially higher than the headline rate suggests.
2. The Exit Strategy
Bridging loans are designed to be repaid quickly — typically by refinancing onto a long-term mortgage, selling the property, or completing a development for sale. We will discuss your specific exit strategy and the risks if it doesn't proceed to plan: default interest, extension fees, possession proceedings. Bridging works best with a clear, realistic exit; it fails painfully when the exit goes wrong.
3. Personal Guarantees and Joint & Several Liability
For bridging loans to limited companies, director's personal guarantees are virtually universal. We will walk through the specific guarantee document — its scope, any joint and several liability with other directors, continuation provisions, demand mechanisms, and the worst-case enforcement scenarios.
4. Deeds of Subordination
A Deed of Subordination places other creditors of the company (most commonly the directors themselves, in respect of director's loans) behind the bridging lender for the purposes of repayment. This can mean directors cannot draw on their loan accounts until the bridging facility is fully repaid. We will explain the practical implications for your cashflow.
5. Company Debentures
A debenture grants the lender a fixed charge over specified company assets (typically the property itself) plus a floating charge over everything else the company owns — bank balances, debtors, contracts, stock, plant and equipment. If the company defaults, the lender can crystallise the floating charge and appoint administrators or receivers over the entire company. We will explain how this works alongside the personal guarantee.
6. Development-Specific Issues
For development finance, we will cover the construction milestones, drawdown schedule, valuation procedures during the build, cost overrun provisions, and the risks of delay. Development bridging is materially riskier than standard purchase bridging — delays compound interest rapidly and can quickly erode developer profit.
7. Bridge-to-Term Arrangements
Some lenders offer combined facilities — short-term bridging immediately converting to a longer-term BTL mortgage on completion of the works. We will discuss the legal structure, the trigger conditions for conversion, and what happens if the conversion doesn't take place (e.g. property fails the long-term lender's criteria).
8. The Specific Bridging Lender's Documentation
We work with all major UK bridging lenders — Octopus Real Estate, United Trust Bank, Hope Capital, MT Finance, Together Money, Together Commercial, West One Loans, Roma Finance, Mercantile Trust, Glenhawk, Masthaven, Octane Capital, Castle Trust, MFS, Avamore, Greenfield Capital, Tuscan, Funding 365 and others. We know each lender's specific guarantee and security documentation.
Frequently Asked Questions
How is a bridging loan different from a standard mortgage?
Bridging loans are short-term (6–18 months typically), high-interest secured loans designed for situations where conventional mortgage finance is too slow or unavailable. Interest is often rolled up rather than paid monthly. The borrower is expected to repay via a clear exit strategy — sale, refinance, or development completion. Standard mortgages are long-term, amortising, lower-rate products requiring stable income evidence and conventional property.
Why are bridging interest rates so high?
Bridging lenders take on more risk than standard mortgage lenders: short timescales, often refurbishment/development properties not lettable in their current state, faster underwriting with less due diligence, and reliance on the borrower's exit strategy. Higher rates compensate for this risk. Typical rates currently run from around 0.55% per month at the prime end to 1.5%+ per month for more difficult cases — substantially higher than standard mortgages over the course of a year.
What is 'rolled-up' interest and how does it affect my total liability?
Rolled-up (or 'retained') interest means the lender doesn't require monthly payments — instead, the interest accrues and is added to the loan balance, with everything repaid at the end. This helps cashflow during the loan term but means the final repayment is substantially higher than the original advance. For a 12-month bridging loan at 1% per month, rolled-up interest adds around 12.7% to the original advance.
Do all bridging loans require a personal guarantee?
For corporate bridging (where the borrower is a limited company), yes — almost universally. For personal bridging by individuals, the guarantee is built into the loan itself. For SPV bridging, director's personal guarantees are standard. Even where guarantees are 'capped', the directors typically have substantial personal exposure.
What is the difference between a Deed of Subordination and a Deed of Priority?
Both deal with the order in which different creditors are paid. A Deed of Subordination is given by an existing creditor (often a director, in respect of their director's loan account) confirming they will rank behind the new lender. A Deed of Priority is typically between two lenders, confirming which has priority over which assets. Both may be required on a bridging transaction — we will identify which apply to you.
Can I take a bridging loan if I already have a mortgage on the property?
Yes — bridging loans can sit as a second charge behind an existing first mortgage, though the first lender's consent is often required. Many bridging loans are structured this way for property owners needing short-term liquidity. The total combined LTV is usually capped (75–80% is common). Your conveyancing solicitor will handle the consent and registration.
What is a 'Heavy Refurbishment' bridging loan?
Heavy refurbishment bridging covers properties needing significant works to bring them to a habitable or lettable standard — typically projects requiring planning permission, Building Regulations approval, or works exceeding 15% of the property value. Lenders treat these as higher risk than 'Light Refurbishment' or pure purchase bridging, with stricter terms, lower LTVs, and tighter exit timelines.
If the development runs over schedule, what happens?
Default interest typically kicks in at a substantially higher rate than the headline. Some lenders permit term extensions (often with an extension fee). Many will eventually take possession and sell the partially-completed property — usually at a loss to the developer. This is why a realistic timetable with contingency is critical. We will walk through these scenarios during your ILA appointment.
What is an 'Auction Finance' bridging loan?
Auction finance is a sub-category of bridging designed for buyers who win property at auction and need to complete within the typical 28-day completion period. Most auction buyers cannot arrange a standard mortgage in that timeframe, so they use bridging to complete and then refinance afterwards. We provide ILA on these regularly — speed is essential and we offer same-day appointments.
Are bridging loans regulated by the FCA?
Bridging loans for personal use (where the property is or will be the borrower's home) are FCA-regulated. Bridging loans for commercial or investment use — including buy-to-let, development, and SPV borrowing — are generally unregulated. This makes ILA particularly important in unregulated bridging, as consumer protections are reduced.
Can you provide ILA for cross-collateralised bridging across multiple properties?
Yes. Some bridging facilities take security over a portfolio of properties rather than just one. We will walk through the implications of cross-collateralisation, the order of release for each property, and the heightened risk profile of multi-property security.
How quickly can you provide ILA for an urgent bridging completion?
We offer same-day video appointments where possible, and turn certificates around within 2-4 hours of receiving signed documents in urgent cases. Bridging completion timelines are typically tight, and we're set up to move at the speed bridging requires.
Areas we do not currently assist with
Please note that Lawyers Online is not currently able to provide Independent Legal Advice on the following matters:
- Equity Release & Lifetime Mortgages — including all Equity Release Council products
- Transfer of Equity — including transfers between spouses on marriage or divorce, and other change-of-ownership transactions
If your matter falls into one of these categories, we recommend contacting an SRA-regulated solicitor who specialises in that area, or your local Citizens Advice for a referral.
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Lenders & Companies We Work With
