Bridging loans are quoted at a loan-to-value, but that percentage is not what lands in your account, and it is not what tells you your deposit. Fees and retained interest come off the gross loan before you see it, so a 75% bridge can mean a real cash deposit closer to 32% of the price.
This guide explains the difference between gross and net loans, how existing equity can stand in for cash, when a bridge can fund its own deposit, and the one structure that makes a genuine 100% bridge possible.
Bridging loans are a fast, flexible way to buy property when a standard mortgage cannot complete in time, whether you are securing a home before your own sale finishes, buying at auction, or moving on a refurbishment project.
Like any secured lending, though, a bridge is not usually granted against the full value of a property. Lenders expect a deposit, or equivalent security, and understanding how that works is central to putting a deal together correctly.
Do you need a deposit for a bridging loan?
In most cases, yes.
A bridging lender wants a financial stake in the transaction so that the bridging loan is comfortably covered by the property, giving a margin of safety if values move or the sale takes longer than planned. As a broad rule of thumb, a standard first-charge bridge on residential security is advanced at around 70-75% of the purchase price or open market value on a gross basis.
That gross figure is the lender’s maximum loan, not the cash that reaches your solicitor, so the deposit you actually contribute is larger than a simple 25-30% of price would suggest, as the next sections explain.
Commercial security is typically capped lower, often 65-70%, and land or unusual assets lower still.
Gross loan versus net loan: what you actually receive
Before working out your deposit, you need to understand the difference between the gross and net loan, because it is the net figure that determines how much cash you must find.
When a lender offers, say, a 75% bridge, that percentage is calculated on the gross loan, the headline figure. It is not the amount that lands in your account.
What you actually receive is the net loan, or net advance, which is the gross loan after the costs of the facility have been deducted at completion.
The gap between the two exists because bridging lenders commonly take their charges upfront rather than billing you separately.
The deductions typically include:
- The lender’s arrangement or facility fee, usually 1-2%of the gross loan.
- Retained interest, where the lender holds back the interest for the agreed term at the outset instead of you paying it monthly or rolling it up. On a longer term this can be a substantial deduction.
- Legal, valuation and telegraphic transfer fees, where these are taken from the advance rather than paid separately.
- Any broker fee, if it is deducted from the loan rather than invoiced.
Because these come off the top, the net advance is always lower than the gross loan, and on a retained-interest deal the difference can be significant.
Here is an illustration on a £300,000 gross bridge over nine months:
| Gross loan (the 75% LTV figure) | £300,000 |
| Less arrangement fee (1.5%) | £4,500 |
| Less retained interest (0.85% pm × 9 months) | £22,950 |
| Less legal, valuation and TT fees | £2,000 |
| Net advance (cash you actually receive) | £270,550 |
Related: The 75% Trap: Why the Bridging Loan You Are Quoted Is Not the Money You Receive
How the deposit really works
This is the point the headline percentage hides. Because you receive the net advance rather than the gross loan, the deposit you must put in is the difference between the purchase price and the net advance, not simply 25% of the price.
The gross loan is capped at the lender’s LTV, but fees and retained interest are stripped out before completion, so your cash contribution has to bridge the shortfall between what the property costs and what the lender actually pays over.
Taking the same £400,000 residential purchase with a 75% gross bridge over nine months, the true deposit works out as follows:
| Purchase price / open market value | £400,000 |
| Gross first-charge bridge at 75% LTV | £300,000 |
| Less arrangement fee (1.5%) | £4,500 |
| Less retained interest (0.85% pm × 9 months) | £22,950 |
| Less legal, valuation and TT fees | £2,000 |
| Net advance (paid towards the purchase) | £270,550 |
| Cash deposit required (price less net advance) | £129,450 |
So although the loan is quoted at 75%, the real cash deposit here is roughly 32 percent of the price, not 25%.
The heavier the fees and the longer the retained interest, the larger that gap becomes. The practical lesson is simple: work back from the net figure, not the headline loan. Tell your broker the exact amount you must have in hand, and let the gross loan be sized so that the net advance, once fees and any retained interest are stripped out, leaves you a deposit you can actually fund.
Two loans quoted at the same LTV and rate can deliver very different net advances, and therefore very different deposits, so the headline rate alone is never the full picture.
Deposit versus equity: an important distinction
Deposit. The upfront cash you put towards a purchase, transferred from your own account to the conveyancing solicitor on completion. It reduces the lender’s share of the deal.
Equity. The value you already own in a property once any outstanding mortgage is deducted from its market value. Equity is not cash in your hand, but a bridging lender can often treat it as if it were, by taking a charge over the property that holds it.
This is the key that unlocks most low-deposit and no-deposit bridging.
Where you have equity in a property you already own, that equity can stand in place of a cash deposit. Rather than moving money from your bank account, you let the lender take security over an asset you control.
The overall borrowing is still kept within the lender’s loan-to-value limits, but the cash you personally need to find can fall sharply, sometimes to nothing.
Can you use a bridging loan for a deposit?
Yes. This is common where you already own property and want to buy another before capital is released elsewhere.
You take a mortgage or bridge on the property you are buying, often capped at around 75% gross LTV, and raise the shortfall using a second-charge bridge on a property you already own. That raised money then works as the cash deposit on the new purchase.
It is a genuinely useful structure, but it should be entered into with clear eyes.
Bridging is materially more expensive than a standard mortgage, interest is usually rolled up rather than paid monthly, and you will now have short-term borrowing secured across more than one property.
As with any bridge, the plan only works if you have a realistic exit that clears the borrowing within the term.
Related: Bridging Loan Exit Strategies
Can you get a 100% bridging loan with no deposit?
Yes, but only in a specific way, and this is where a lot of online guidance is misleading.
A bridging lender will almost never advance 100% of the value of a single property. Taking all of the risk while the borrower takes none is not something the market offers.
What makes genuine 100 percent bridging possible is additional security.
If you can bring a second property into the transaction, one with enough equity in it, the lender assesses the risk across the combined security rather than against the purchase alone.
The loan is then secured against both properties, a technique known as cross-charging or cross-collateralisation.
Because the lender’s overall position remains conservative when measured across everything it holds, it can advance the full purchase price on the property you are buying, and you complete without putting in a cash deposit.
A worked example
Say you want to buy a property at auction for £100,000 to refurbish and sell on.
On a single security a lender would advance 75% gross, £75,000, but after fees and retained interest the net advance is lower, so the cash you must find is the difference between the price and that net figure, well above a flat 25%.
Bring your own home or another owned property, with sufficient free equity, into the deal and the lender can take a charge over both. The combined loan-to-value across the two properties is still comfortable, so the lender advances the full £100,000 and you buy with no money down.
| Single security | With additional security cross-charged | |
| Auction / purchase price | £100,000 | £100,000 |
| Gross bridge advance | £75,000 (75%) | £100,000 (100% of price) |
| Less fees and retained interest | £8,863 | n/a |
| Net advance towards purchase | £66,138 | £100,000 |
| Cash needed from you | £33,862 | £0 |
| Security taken | The property bought | New property plus your own equity |
Notice that even on the single-security route the real cash required is around £33,900, not £25,000, once fees and nine months of retained interest are deducted from the gross loan.
The essential point is that 100% bridging is never lending without security. It is lending against more security.
If you do not own another suitable property with equity in it, a true no-deposit bridge is very unlikely to be available, and you should treat any offer that ignores this as a warning sign. Bringing in additional security also means that property is at risk if the loan is not repaid, so it is not a step to take lightly.
Real-world uses
Bridging a deposit ahead of a remortgage. You have found a property to buy but your capital-raising remortgage elsewhere has not completed. A bridge covers the deposit now so you can secure the purchase, and is repaid once the remortgage funds arrive. Acting quickly can also strengthen your negotiating position, provided the exit is genuinely in progress.
Auction purchases. Auction contracts usually require completion within 28 days, far quicker than a standard mortgage can manage. Auction finance agreed in principle before the auction lets you bid with confidence and complete on time, then refinance onto a longer-term mortgage or sell once the work is done.
Buying an unmortgageable property. Some properties simply will not qualify for a standard mortgage in their current state. A missing or non-working kitchen or bathroom is the classic example, and many lenders treat that alone as making a home uninhabitable and therefore unmortgageable. Other common reasons include no heating, serious disrepair, fire or flood damage, or an incomplete refurbishment. Mainstream lenders decline these because they need the property to be good security and easily saleable from day one, which is why such homes are often marketed as cash buyers only.
A bridge is the standard way through. It funds the purchase now, you carry out the work that makes the property mortgageable, and once a working kitchen and bathroom and any other essentials are in place you refinance onto a normal mortgage, which repays the bridge, or you sell. The exit depends on the finished property meeting ordinary lending criteria, so the works and their cost need to be realistic before you commit.
Breaking a chain. When a property chain stalls, a bridge lets you complete your purchase without waiting for your own sale to finish. Once the existing property sells, the proceeds repay the bridge. It rescues the move but relies, again, on a credible sale as the exit.
Read more: Bridging Loan Uses
Your exit strategy still matters most
Every bridging application stands or falls on its exit, your concrete plan for repaying the loan and its rolled-up or retained interest by the end of the term.
Lenders scrutinise your exit strategy closely because a bridge is designed to be short-term finance, typically running from a few months up to around twelve to eighteen months, and they need to see how it ends before they will begin.
Common exits include:
- Sale of the property bought, or of your existing home in a chain-break case.
- Refinancing onto a standard mortgage once the property meets normal lending criteria or works are complete.
- Sale of another asset, such as a second property or investments.
- Release of equity elsewhere through a remortgage or second charge.
A note on regulation: where you or a close family member will live in the property, the bridge is a regulated contract and standard terms are capped at twelve months. Bridging used purely for investment, buy-to-let or commercial purposes usually falls outside FCA regulation. Either way, the loan must be arranged through an FCA-authorised broker, and the exit must be realistic before you commit.
The key points to remember
- Most bridging loans need a deposit. The gross loan is capped at around 70-75% of value on standard residential security, but that is not the cash advanced to you.
- The headline loan is the gross figure; fees and any retained interest are deducted upfront, so the net advance you receive is lower.
- Your real cash deposit is the purchase price less the net advance, which is usually more than a flat 25% of the price.
- Your deposit and loan-to-value drive the rate and the terms you are offered.
- Equity in a property you own can replace a cash deposit.
- A bridge can itself fund a deposit on a new purchase, via a second charge.
- A bridge can buy an unmortgageable property, funding the works that make it mortgageable so you can then remortgage or sell.
- 100% bridging is possible only where additional security is cross-charged, never against a single property alone.
- A realistic, evidenced exit strategy is essential in every case.
Every bridging case is different, and the right structure depends on the property, your wider assets and your exit. To talk it through, call Drake Mortgages on 020 8301 7930.
Frequently Asked Questions
In most cases, yes. A bridging lender wants a financial stake in the deal so the loan is comfortably covered by the property. A standard first-charge bridge on residential security is typically advanced at around 70-75% of the purchase price or value on a gross basis, with commercial security capped lower, often 65-70% , and land or unusual assets lower still.
The gross loan is the headline figure the lender quotes, calculated against the property’s value. The net loan, or net advance, is what actually reaches you once the lender’s costs are taken off at completion, including the arrangement fee, retained interest, and legal and valuation fees. Because these come off the top, the net advance is always lower than the gross loan, which is why the real deposit needed is worked out from the net figure rather than the headline percentage.
Yes. Equity is the value you already own in a property once any outstanding mortgage is deducted from its market value. A bridging lender can treat that equity in the same way as cash, by taking a charge over the property that holds it. This is how most low-deposit and no-deposit bridging works: instead of moving money from your own account, the lender secures the loan against an asset you already control, while keeping the overall borrowing within its loan-to-value limits.
Yes. If you already own a property, a second-charge bridge against it can raise the shortfall needed as a deposit on a new purchase, alongside a mortgage or bridge on the property you’re buying. This is a useful structure, but bridging costs more than a standard mortgage, interest is usually rolled up rather than paid monthly, and you will have short-term borrowing secured across more than one property, so a clear, realistic exit is needed before you commit.
Yes, but only through additional security, not against a single property alone. A bridging lender will almost never advance the full value of one property on its own, because that would leave it carrying all the risk. If you bring a second property with enough free equity into the deal, a technique known as cross-charging, the lender can assess the risk across the combined security and advance the full purchase price. Without a second property to offer, a true no-deposit bridge is unlikely to be available.