How Much Deposit Do You Need For a Bridging Loan?
The lowest deposit required for a bridging loan is 25% of the property’s value, which corresponds to a maximum loan-to-value (LTV) of 75%, though in very particular cases, some lenders may offer 80% or 85% LTV, requiring deposits of just 15% or 20%.
Your deposit can be made up of cash, savings, investments, or equity in existing property. This flexibility makes bridging finance particularly attractive to property developers and investors whose capital is often tied up in existing properties, offering a scalable approach to portfolio growth through modest deposits and equity utilisation.
Bridging Loan Deposit Example
For instance, purchasing a £500,000 property at 75% LTV would require a 25% deposit of £125,000, with the lender providing the remaining 75% (£375,000).
What is The Average Deposit For a Bridging Loan?
According to Bridging Trends, the average LTV for a bridging loan is 55%, which means that the average deposit is around 45% – suggesting that most successful borrowers do have a good deposit and this is something that lenders like to work with.
What is The Minimum Deposit Needed For a Bridging Loan?
The minimum deposit for bridging loans typically ranges from 25%-40% of the property’s value, though this varies between lenders.
| Type of Bridging Loan | Typical LTV | Minimum Deposit / Equity Required |
| Residential bridging loans | Up to 75% | 25% |
| Commercial bridging loans | 60% – 70% | 30% – 40% |
| Second charge bridging loans | 60% – 65% | 35% – 40%+ |
What Are The Minimum Deposits For a Residential Bridging Loan?
Residential bridging loans typically require a minimum 25% deposit, as lending against homes and flats is considered lower risk due to strong market demand and liquidity.
However, you may need 30% or 40% depending on your specific project and associated risk factors.
What Are The Minimum Deposits For a Commercial Bridging Loan?
Commercial bridging loans require minimum deposits of 30%-40% due to their higher perceived risk compared to residential properties.
Commercial assets like offices, warehouses, and retail units are typically harder to sell than residential properties, with lenders arguing there’s reduced demand and a smaller market for such properties – hence the higher deposit requirement to manage lender risk.
What Is The Minimum Deposit For Second Charge Bridging Loan?
Second charge bridging loans typically require minimum deposits of 35%-40% of the property’s value, influenced by factors including affordability, project potential, and borrower credentials.
This loan type ranks second in payment priority against a property, often positioned behind existing mortgages. Being lower in the hierarchy requires substantial property equity for eligibility, necessitating the 35%-40% equity or deposit requirement.
What Factors Impact The Deposit For a Bridging Loan?
Multiple factors influence the deposit required for bridging loan approval and funding:
Lender criteria – Different lenders maintain varying criteria and risk appetites, particularly influenced by market conditions. Working with bridging loan brokers can help you get access to different terms and offers across multiple lenders.
Borrower credentials – Experienced developers with excellent track records may secure preferred rates and bridging loan LTV options compared to less experienced applicants. Additional factors include company size, credit rating, and comprehensive exit strategies.
Project and asset evaluation – Depending on how complex the project is, the condition of the project and its location can all contribute to the minimum deposit that the lender is willing to accept. Higher risk opportunities may require a higher deposit to mitigate risks for the lenders.
Loan structure – Proposed loan terms also affect deposit amounts. Lower deposits may be available but accompanied by higher monthly charges.
Additional security – Some lenders accept security from other owned assets or properties, potentially helping you to access bridging loans with reduced deposits.
Can I Get a Bridging Loan With No Deposit?
Generally, bridging loans require deposits starting from 25%.
However, no-deposit bridging loans may be possible under specific circumstances:
- Existing property equity can support new bridging loan applications
- Multiple properties offered as collateral covering the full loan amount
- Borrower has a strong exit strategy combined with extensive experience and track records
What is The Maximum LTV I Can Borrow For a Bridging Loan?
The maximum LTV for residential bridging loans typically reaches 70%-75%.
Some lenders may consider 80%, 85%, or even 90% LTV under particular circumstances, including cross-charging other properties for additional security, demonstrating strong track records, or incorporating additional financing layers such as mezzanine finance.
