How to Use a Small Bridging Loan to Fund Your Next Property Flip
Maximise Your Profits with a Small Bridging Loan
Flipping properties can be one of the fastest ways to generate substantial profits in the UK property market. However, the biggest hurdle for many investors is securing enough funds for the deposit on their next purchase. This is where small bridging loans come in—providing quick, flexible financing to help you move forward with your next deal.
In this guide, we’ll explore how you can use first and second charge bridging loans to fund deposits, secure property deals faster, and maximise your returns.
What Is a Small Bridging Loan?
A small bridging loan is a short-term finance option typically used to cover funding gaps when buying, renovating, or flipping a property. These loans are ideal for investors looking to secure their next deal without tying up all their capital.
Types of Small Bridging Loans
- First Charge Bridging Loan – Secured against a property without an existing mortgage.
- Second Charge Bridging Loan – Used when there’s an existing mortgage, allowing you to leverage equity for a deposit.
These loans offer fast approvals, flexible terms, and no long-term commitments, making them perfect for property investors looking for quick turnaround deals.
How Small Bridging Loans Help Fund Property Flips
1. Use a Second Charge Bridging Loan to Raise a Deposit
If you already own a property with equity, you can use a second charge bridging loan to release funds for the deposit on your next flip. This means you can secure a new property without waiting to sell your existing one.
2. Secure a Bargain Before Someone Else Does
In property flipping, speed is everything. Bridging loans provide fast access to capital, allowing you to snap up below-market-value properties before competitors.
3. Cover Refurbishment Costs
Many bridging loans cover up to 100% of renovation costs, so you can add value and flip the property for a higher resale price.
4. Avoid Broken Property Chains
If you’re waiting for funds from a sale, a bridging loan can act as a temporary solution, ensuring your new purchase isn’t delayed.
5. Fund Multiple Flips at Once
By using a bridging loan for deposits, you can spread your capital across multiple projects, increasing your flipping potential.
Key Features of Small Bridging Loans for Flipping
✅ Loans from £25,000 – £500,000
✅ Up to 75% Loan-to-Value (LTV) for First Charge Loans
✅ Up to 70% LTV for Second Charge Loans
✅ Funds Available in Days
✅ No Monthly Repayments – Interest Can Be Rolled Up
✅ Terms from 3 to 18 Months
✅ Available for Residential, Semi-Commercial & Commercial Properties
✅ Can Be Used for Auction Purchases
Case Study: Using a Small Bridging Loan for a Property Flip
Investor Profile: John, an experienced property investor, found a 3-bedroom house in Manchester for £150,000, needing minor renovations. The property was valued at £200,000 after refurbishment.
How John Used a Small Bridging Loan:
- Took a second charge bridging loan of £40,000 against his existing property.
- Used the funds for the deposit on the new purchase.
- Secured a first charge bridging loan for the balance of the purchase price and refurb costs.
- After a 3-month renovation, John sold the property for £200,000, repaid the loan, and walked away with a £30,000 profit.
Expert Insights: Common Mistakes to Avoid with Small Bridging Loans
✅ Not Having a Clear Exit Strategy – Ensure you have a strong plan to repay the loan, whether through a sale or refinance.
✅ Underestimating Costs – Factor in refurbishments, legal fees, and loan interest to avoid budget shortfalls.
✅ Ignoring Market Trends – Always research the area’s property demand before committing to a flip.
✅ Delaying the Process – Bridging loans are short-term, so swift execution is key to profitability.
FAQs About Small Bridging Loans
Q: How fast can I get a bridging loan?
A: Bridging loans can be arranged in as little as 3-7 days, making them ideal for time-sensitive property deals.
Q: Can I get 100% financing?
A: Yes, if you have additional security, lenders can provide up to 100% of the purchase price and renovation costs.
Q: What happens if I can’t sell the property in time?
A: You can refinance onto a long-term mortgage or extend the bridging loan if needed.
Q: Do I need perfect credit to get a bridging loan?
A: No, bridging lenders focus more on the property value and exit strategy rather than credit history.
Q: Can I use a bridging loan to buy at auction?
A: Yes! Many investors use bridging loans to secure quick auction purchases, completing within 28 days.
Step-by-Step Guide: How to Apply for a Small Bridging Loan
- Assess Your Needs – Determine how much funding you require and your exit strategy.
- Check Your Security – Decide which property you will use as collateral.
- Compare Lenders – Work with a broker to find the best rates and terms.
- Apply and Provide Documents – Submit ID, proof of property value, and an exit plan.
- Loan Approval & Valuation – The lender will assess your property and approve funding.
- Receive Funds – Once the legal work is complete, funds are typically released within days.
- Execute Your Flip – Carry out renovations and prepare for resale or refinance.
- Repay the Loan – Use profits from the sale or switch to a mortgage.
Get Started with a Small Bridging Loan Today
A small bridging loan is the perfect tool for property investors looking to flip properties faster and maximise profits. Whether you need funds for a deposit, renovations, or quick completions, bridging finance can help you seize opportunities and grow your portfolio.
At Sunrise Commercial Finance, we specialise in fast, flexible bridging loans tailored to property investors like you.
For more information contact us for a fees free chat.
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📧 Email: john@sunrisecommercial.co.uk
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