100% Bridging Finance: Can You Borrow With No Deposit?

Bridging loans are short-term finance judged mainly on the security and the exit, not on your income. That makes the gap between the loan and the property's value the lender's main protection. If the exit fails and the lender has to sell, it needs enough headroom to cover a discounted sale, legal and agency costs, and months of unpaid interest. A 25% to 30% equity cushion is how most specialist bridging lenders size that risk, which is why they stop at 70% to 75%.

100% bridging finance works by keeping that cushion in place while moving where it comes from. Instead of your cash deposit, the lender's protection comes from a second property, a discount on the purchase price, or a partner's equity. The lender's own risk limits do not change.

It matters whether a quoted LTV is gross or net. The gross loan amount is the full facility, including the arrangement fee and any interest retained at the start. The net loan amount is what actually reaches your solicitor. A lender offering 75% gross LTV with 12 months of interest retained might leave you with a net advance of about 67% of value (assuming a 2% fee and 0.75% a month). When people say they want 100% bridging finance, they usually mean they want the net advance to cover the whole purchase price, which is a higher bar than it first appears.

Lenders also look at the purchase price, not just the valuation. Many cap the loan at a percentage of the lower of price and value, and treat a large gap between the two with caution unless there is a clear reason for it. They will also want a realistic exit strategy that repays the whole gross loan by the repayment date, usually through a sale or a refinance onto a buy-to-let or commercial mortgage. Our guide to bridging loan rates explains how LTV bands affect pricing, and you can test gross and net figures on our bridging loan calculator.

The same types of bridging loans are used whether you borrow 65% or 100% of the price. What changes is the security package. The main distinctions are these.

Closed bridging loans have a fixed repayment date because the exit is already agreed, for example a sale that has exchanged or a mortgage offer already issued. Open bridging loans have no fixed repayment date within the term, typically up to 12 to 24 months, because the exit is expected but not yet secured. Lenders are more cautious about full leverage on open bridging finance, because there is less certainty the loan will be repaid on time.

A first charge bridging loan is secured as the only or senior debt on a property. A second charge bridging loan sits behind an existing mortgage. Most 100% bridging finance uses a first charge on the property being bought plus either a first or second charge on the additional property. Our guide to second charge bridging loans explains how that ranking works.

Bridging loans secured on investment property, commercial property or land are usually unregulated business-purpose loans. Bridging loans secured on a home you or a close family member live in are usually regulated by the Financial Conduct Authority (FCA). Construction Capital is not authorised by the FCA and arranges unregulated, business-purpose bridging finance only.

There are three legitimate routes, and they can be combined. Each keeps the lender's exposure within its normal limits while removing some or all of the cash you would otherwise put in.

A fourth option sometimes suggested is a second loan from a separate lender behind the bridging loan. In practice few first-charge bridging lenders consent to that on an acquisition, and stacking two short-term loans rarely makes financial sense. It is more common on development finance, where mezzanine finance is an established layer; see our guide to 100% development finance if you are funding a build rather than a purchase.

Offering additional security is the most reliable way to borrow the full purchase price. The lender takes a charge over the property you are buying and a second property you already own. Because both assets secure the same loan, the lender looks at the combined value, and the LTV on the new purchase alone can exceed 100% while the overall position stays comfortable.

The additional property can be unencumbered, in which case the lender takes a first charge, or it can already have a mortgage, in which case the bridging lender takes a second charge behind it. A second charge usually needs the consent of the existing mortgage lender and is priced a little higher. Investment property, commercial buildings and land can all be offered; the lender will value each asset separately.

The example shows both the appeal and the catch. The purchase is fully funded, but at the end of it the company has two mortgaged properties instead of one mortgaged and one debt-free. The cash was not avoided; it was replaced by equity drawn from an asset that was previously unencumbered.

Where a property is bought for materially less than its open market value, some specialist lenders will size the loan on the valuation rather than the price. That can fund most or all of the purchase price without any additional security. Our full guide to below market value bridging loans covers how lenders assess these deals.

The discount has to be large, genuine and explained. Lenders are comfortable with discounts that come from a recognisable cause: an auction lot with a short completion, a probate or receivership sale, a property that is currently unmortgageable, or a motivated seller with a documented reason. They are far more cautious about discounts that exist only on a deal sourcer's spreadsheet, or sales between connected parties.

The arithmetic is also tighter than many property investors expect. Consider a property with an open market value of £350,000 bought for £250,000, a 28.6% discount. At 70% of value the gross loan is £245,000. Deduct a 2% arrangement fee (£4,900) and 6 months of retained interest at 0.75% per month (£11,025) and the net advance is £229,075. That leaves a shortfall of £20,925 against the price, before stamp duty and fees. Even a large discount does not always deliver a true no deposit bridging loan, which is why BMV deals are often combined with additional security.

The biggest practical risk is the valuation. If the lender's surveyor values the property below your expectation, the loan falls with it, usually late in the process. At auction the risk is sharper: you are committed on the fall of the hammer, pay a 10% deposit on the day and usually have around 20 to 28 days to complete. If you plan to use 100% bridging finance on an auction purchase, line up the lender and the valuation before auction day and keep a fallback source of funds. Our guide to bridging loans for auction purchases covers that timetable, and our auction finance calculator helps test the numbers.

If you have the deal and the skills but not the cash, an equity partner can provide the deposit and costs while a bridging lender provides the debt at a normal LTV. From the lender's point of view, this is standard bridging finance: the money is simply coming from the partner rather than from you. The lender will want to see where the equity comes from and will carry out anti-money-laundering checks on the partner.

The cost is a share of the profit, and often a share of control. On a straightforward buy-refurbish-refinance deal, giving away half the profit to avoid putting in £100,000 can be expensive. On a larger development, it can be what makes the project possible. Our JV equity service sets out how these partnerships are typically structured, and our guide to mezzanine vs equity JV compares the cost of equity with the cost of higher-leverage debt.

Whichever structure you use, document it properly. A written agreement should set out who contributes what, how profits and losses are split, who makes decisions, and what happens if the exit is late. Lenders will ask to see it, and it protects both parties.

Bridging loan interest rates typically run from 0.55% to 1.5% per month, plus an arrangement fee of 1% to 2%. Fully leveraged deals with complex security usually price towards the middle or upper part of that range, because the lender is relying on more than one property and a tighter margin of equity. Who qualifies for the better interest rates comes down to the combined LTV across all the security, the quality of the exit and your experience of buying and refinancing property. Speed costs little extra: a well-prepared 100% case can still be a fast bridging loan, but the second title adds legal work, so allow for it in your timetable. Even when the loan covers the full purchase price, the transaction is not free of cash. In the additional security example above, the company would still need to pay for the following before or at completion. The figures are illustrative.

Stamp duty is the item that surprises people most. It is calculated on the price, is due within 14 days of completion, and lenders do not normally fund it. Check the figure for your deal with our stamp duty calculator, and take tax advice on your specific circumstances, as reliefs and rates depend on the buyer and the property. Scotland uses Land and Buildings Transaction Tax and Wales uses Land Transaction Tax, each with its own rates.

Interest is the other point to watch. In our example it is retained, meaning 12 months of interest is deducted upfront. If you repay early, lenders typically refund unused retained interest, but check the terms. If interest is serviced monthly instead, the net advance is larger but you need the cash flow to pay it each month. The longer the loan runs past its planned repayment date, the more of the equity cushion is eaten by interest.

Borrowing 100% of the price moves all of the risk onto you and your other assets. It can be the right decision on a strong deal with a clear exit, but it should be a deliberate one.

If those risks feel uncomfortable, a lower-leverage structure may be better value overall. Our guide to alternatives to bridging loans covers options such as delayed completion, deferred payment and term finance.

Bad credit does not automatically rule out bridging loans, because bridging lenders focus on the security and the exit rather than income. Many specialist lenders will consider past defaults, satisfied county court judgments or missed payments, particularly if they are older and explained. What bad credit does do is reduce appetite for full leverage. A lender that accepts a weaker credit history will usually want a lower combined LTV, stronger additional security or a more certain exit, and will price the loan higher. If your credit history is complicated, disclose it upfront; surprises found in a credit search late in the process are what cause declines.

Lenders who will consider full-price funding want to see a well-prepared case. Before approaching the market, pull together the following: details and recent valuations or estimates for every property you can offer as security, including any existing mortgages; the reason for any discount to market value, with evidence; a written exit strategy with realistic figures and a fallback; evidence of the cash available for stamp duty, fees and a contingency; details of any credit issues; and details of any equity partner and the agreement between you.

Not every lender offers cross-charged or valuation-based bridging loans, and criteria change often, so a specialist broker can save wasted applications and valuation fees. As an independent broker with access to more than 100 lenders, we can identify which specialist bridging lenders will consider additional security or valuation-based lending on your deal, and structure the gross and net figures so the net advance actually covers what you need. Construction Capital arranges unregulated, business-purpose finance only; if any property involved is a home, we will point you to an FCA-authorised adviser. To test your numbers, submit your deal or read more about our bridging loan service.