It is possible to arrange bridging finance for 100% of a property’s purchase price without providing a cash deposit. However, this is not standard bridging lending, and lenders will usually require additional property security or evidence that the property is being purchased below its market value.
A 100% bridging loan can be useful when buying a property before selling another, purchasing at a discount or completing a time-sensitive transaction where funds are tied up elsewhere.
The important distinction is that borrowing 100% of the purchase price does not necessarily mean borrowing 100% of the property’s value.
At Kerr & Watson, we help customers explore bridging finance options, including cases where the full purchase price needs to be funded.
Find out Your Options
What Is a 100% Bridging Loan?
A 100% bridging loan is a short-term secured loan that may allow you to borrow the full agreed purchase price of a property without providing a cash deposit.
With a standard bridging loan, lenders typically restrict borrowing to a percentage of the property’s value, often around 70–75%, although individual limits vary.
Borrowing the entire purchase price requires a different approach.
In many cases, the borrower offers additional property as security, allowing the lender to assess the loan against the combined value of the properties.
Alternatively, some lenders may consider lending against the independently assessed market value of a property being purchased at a genuine discount.
Both arrangements depend on the lender’s criteria, valuation and underwriting.
Even when the full purchase price can be funded, you may still need money for legal fees, property taxes, valuation costs and other expenses.
How Can You Get 100% Bridging Finance Without a Deposit?
There are two main ways lenders may consider funding the full purchase price of a property.
1. Using Another Property as Additional Security
If you own another property with sufficient available equity, a bridging lender may be willing to secure the loan against both properties.
For example, you might own a home that has not yet sold but want to proceed with purchasing your next property.
Rather than selling your existing home first to release the equity for a deposit, the lender could potentially take security over both properties and provide the funds needed to complete the purchase.
The lender will assess the combined value of the properties, taking account of any existing mortgages or secured borrowing.
This arrangement may allow the full purchase price to be funded while keeping the overall loan-to-value within the lender’s permitted limits.
However, both properties could be at risk if the bridging loan is not repaid, and any existing mortgage lender’s consent or other legal requirements may need to be addressed.
2. Purchasing a Property Below Market Value
Some bridging lenders consider lending against the property’s independently assessed market value rather than restricting the loan to a percentage of the agreed purchase price.
This can be useful where a genuine discount has been negotiated.
Example:
- Agreed property purchase price: £240,000
- Independently assessed market value: £320,000
- Bridging loan required: £240,000
- Loan-to-value based on market value: 75%
In this example, the proposed borrowing covers 100% of the purchase price but represents 75% of the property’s assessed market value.
A lender prepared to use that valuation basis might therefore consider funding the entire purchase price without additional property security.
However, not all lenders accept this approach. Some calculate the maximum loan against the lower of the purchase price or valuation.
The lender will also need to understand why the property is being sold at a discount. A low agreed price does not automatically establish that the property is worth more.
These figures are illustrative. Any actual loan would depend on the accepted valuation, lending criteria and available funds after fees and interest arrangements have been accounted for.
What Do Lenders Look for When Assessing 100% Bridging Finance?
Although 100% purchase-price bridging finance is possible, lenders will need to establish that the proposed borrowing is adequately secured and can be repaid within the agreed term.
The main considerations include:
- Property value and security: The lender will assess the property being purchased and any additional properties offered as security, including existing mortgages and charges.
- Available equity: Where another property is being used, the amount of equity available will influence how much additional borrowing can be supported.
- Purchase price and valuation: If you are buying below market value, the lender will need an acceptable independent valuation and a satisfactory explanation for the discount.
- Exit strategy: You must demonstrate how the loan will be repaid, whether through selling a property, refinancing or another credible source of funds.
- Property condition: The lender will consider the property’s construction, condition, title and suitability as security. Properties requiring significant work may need specialist underwriting.
- Borrower circumstances: Credit history, property experience and financial circumstances may also be relevant, depending on the lender and type of bridging loan.
The lender’s assessment will also account for the interest, fees and other amounts payable during the loan term.
When Might You Use 100% Bridging Finance?
There are several circumstances where funding the full purchase price through bridging finance may be considered.
Buying Before Selling Your Existing Property
If you have found a new home but your current property has not yet sold, bridging finance may allow you to proceed with the purchase.
Where sufficient equity exists in your current home, the lender may be able to use both properties as security.
The bridging loan could then be repaid once your existing property sells.
This can be useful when a property chain breaks down or when you need to complete your onward purchase before your sale is ready.
Buying a Property at Auction
Property auctions often involve tight completion deadlines, which may make arranging a conventional mortgage difficult.
A bridging loan can provide short-term purchase funding, potentially including the full purchase price where the lender’s security and valuation requirements are satisfied.
However, not having a deposit available can present difficulties at auction because an immediate contractual deposit is usually required when the successful bid is accepted.
It is important to establish how that deposit and the remaining purchase funds will be provided before committing to an auction purchase.
Purchasing a Property at a Discount
Property investors sometimes negotiate purchases below the independently assessed market value.
Where the lender is satisfied that the valuation is supported and the transaction meets its criteria, it may be possible to borrow the entire purchase price.
The lender will still assess whether the property can be sold or refinanced for enough to repay the bridging loan.
Purchasing a Property That Requires Refurbishment
Bridging finance may be considered where a property needs renovation before it can be sold or refinanced.
If the purchase is sufficiently discounted or additional property security is available, the lender might be prepared to fund the full purchase price.
However, funding the purchase does not necessarily cover the refurbishment costs. You will need to demonstrate how any required work will be financed and completed.
The proposed refurbishment and exit strategy must also be realistic within the agreed loan term.
How Much Does 100% Bridging Finance Cost?
The cost of a bridging loan depends on the amount borrowed, loan term, property, available security and lender.
Bridging finance is generally more expensive than a conventional long-term mortgage because it is designed for short-term borrowing.
Costs may include:
- Interest: Often quoted as a monthly rate, with the amount depending on the lender, loan-to-value and circumstances.
- Arrangement fees: Charged by the lender for setting up the loan, often calculated as a percentage of the facility.
- Valuation fees: A valuation may be required for each property offered as security.
- Legal fees: These can include your own solicitor’s fees and the lender’s legal costs.
- Broker fees: Where applicable, these should be explained before proceeding.
- Exit fees: Some bridging products charge a fee when the loan is repaid.
There may also be additional costs depending on the transaction and whether the loan needs to be extended.
How Is Interest Paid on a Bridging Loan?
Bridging lenders may offer different ways of dealing with interest.
Serviced interest means you make regular interest payments during the loan term.
Retained interest means the lender sets aside an amount to cover interest for an agreed period, usually reducing the funds available to you at the outset.
Rolled-up interest is added to the outstanding loan balance and repaid later, usually when the bridging loan is redeemed.
Not every arrangement involves compound interest, and the method used can affect both the total borrowing cost and the amount available on completion.
Does 100% Bridging Finance Cover Fees and Stamp Duty?
Not necessarily.
A lender may agree to fund the full purchase price without also providing the money needed for Stamp Duty Land Tax, or the equivalent property transaction tax in Scotland or Wales, legal fees and other associated costs.
Retained interest and fees deducted from the facility can also reduce the amount available to complete the purchase.
For this reason, it is important to distinguish between the gross loan amount and the net funds actually available on completion.
How Do You Repay a 100% Bridging Loan?
Bridging loans are intended to be repaid over a relatively short period, commonly within 3–18 months, although terms vary by lender and product.
Before agreeing to lend, the lender will want to understand your exit strategy.
Common repayment methods include:
Selling an Existing Property
If you have used bridging finance to purchase a new home before selling your current one, the proceeds from the existing property sale may be used to repay the loan.
The lender will consider the expected sale value, existing secured borrowing and whether the remaining proceeds are sufficient.
Refinancing onto a Longer-Term Mortgage
In some circumstances, the bridging loan can be repaid by refinancing onto a residential, buy-to-let or commercial mortgage.
However, obtaining longer-term finance is not guaranteed.
The property must meet the new lender’s requirements, and the borrower must qualify under the applicable affordability, income and lending criteria.
Where refurbishment is involved, the lender may also require the work to be completed before refinancing.
Selling the Property Being Purchased
Property investors may intend to sell the property after improvements or once a suitable buyer has been found.
The lender will assess whether the anticipated sale proceeds are sufficient and whether completion is realistic within the proposed bridging term.
A credible exit strategy is essential. If the planned sale or refinance is delayed, additional interest, charges or other consequences may arise.
What Are the Risks of 100% Bridging Finance?
Borrowing the full purchase price can be useful, but there are important risks to consider.
Additional Property May Be at Risk
Where another property is offered as security, the lender may have the right to enforce its security if the loan is not repaid.
This could include a property you currently live in, depending on the arrangement.
Higher Borrowing Costs
Interest and fees can be substantial, particularly if the loan remains outstanding for longer than originally planned.
Where interest is added to the loan, the amount required to repay it can increase over time.
Delays to the Exit Strategy
A property sale may take longer than expected, or a refinancing application could be declined.
If the bridging loan reaches the end of its term without being repaid, the lender may charge additional fees or default interest and may take enforcement action.
Property Valuation Risks
A lender’s valuation may be lower than anticipated.
This is especially important with below-market-value purchases, where funding the full purchase price may depend on the property meeting a particular valuation.
A lower valuation could mean additional cash or security is required.
Limited Lender Availability
Not all bridging lenders offer 100% purchase-price funding.
Lending criteria can be restrictive, particularly where the borrower has limited additional security or is relying on a discounted purchase price.
Are 100% Bridging Loans Regulated?
Bridging loans can be regulated or unregulated, depending on the circumstances.
For example, borrowing secured against a property used or intended to be used as a home by the borrower or certain family members may fall within regulated mortgage requirements.
Bridging finance used for property investment or business purposes may be unregulated, depending on how the transaction is structured.
The distinction matters because different regulatory requirements and borrower protections may apply.
It is important to establish the correct type of finance before proceeding.
Frequently Asked Questions About 100% Bridging Finance
Can I Get a 100% Bridging Loan Without Owning Another Property?
Potentially. Some lenders consider funding the full purchase price where a property is being purchased at a genuine discount to its independently assessed market value.
However, this depends on the lender’s criteria, valuation and proposed repayment strategy. It is not available for every property purchase.
Can I Borrow 100% of a Property’s Market Value?
Borrowing the entire market value against that property alone is not generally available through standard bridging finance.
What may be possible is borrowing 100% of the purchase price while the actual loan-to-value remains within the lender’s limits, either through additional security or a discounted purchase.
Can I Get 100% Bridging Finance with Bad Credit?
Some bridging lenders consider applicants with adverse credit, but this depends on the type and severity of the credit issues, the security available and the exit strategy.
Credit problems may reduce the available options or affect the cost of borrowing.
Do I Need to Make Monthly Payments?
Not always. Depending on the lender and product, interest may be paid monthly, retained at the outset or added to the loan balance for repayment later.
However, not making monthly interest payments does not mean the borrowing is interest-free or that repayments can be deferred indefinitely.
How Kerr & Watson Can Help with 100% Bridging Finance
Arranging bridging finance for the full purchase price requires careful consideration of the property, available security and proposed repayment strategy.
At Kerr & Watson, we can review your circumstances and establish whether lenders may consider providing the funding you need.
We can help by:
- Assessing the property being purchased and any additional security available.
- Reviewing the purchase price, valuation and existing mortgage balances.
- Establishing whether the proposed exit strategy is realistic.
- Comparing available bridging finance options and explaining the associated costs.
- Managing the application and liaising with the lender throughout the process.
Where appropriate, we can also consider whether a conventional mortgage or another form of finance would be more suitable.
Looking for 100% Bridging Finance?
Whether you are purchasing a property before selling another, buying at a discount or trying to complete a time-sensitive transaction, we can help you understand the options. Speak to an adviser.
