Bridging loans are designed as short-term finance solutions, often used when buyers, investors, or homeowners need to act quickly and cannot afford long delays in funding to be arranged. They usually last between 6 and 18 months, giving borrowers time to sell a property, arrange a mortgage, or complete refurbishment.
One of the most common questions borrowers ask is, can a bridging loan be repaid early? The short answer is yes, but it is important to be aware of what this involves, should you choose to gown down that avenue. At Goldhill Finance, we provide bridging loans from £10,000 to £500,000 and provide clear and well-explained repayment options, including what happens if they want to settle early.
How bridging loan repayment works
A bridging loan works typically by securing the funds against a property, with monthly interest payments or with the interest rolled up and paid at the end of the term. When the loan comes to an end, there is a payback due on the borrowed capital, along with any interest that has accrued.
Repayment usually comes from one of the following exit strategies:
- Selling the property
- Refinancing onto a mortgage
- Using funds from another business or investment
Since bridging loans are short-term, they are not intended to run for years. However, borrowers often complete their plans sooner than expected, and as such they may have a desire to repay before the agreed term reaches its conclusion.
Can you repay a bridging loan early?
Yes, bridging loans can be repaid before the end of the agreed term. In fact, early repayment is relatively common. Your property could perhaps have sold more quickly than anticipated or if a mortgage is approved sooner than anticipated, the borrower may no longer need the bridging finance for the longer-period that remains on it.
At Goldhill Finance, we work with clients who often are ahead of their schedule. Early repayment can mean the overall interest to be repaid becomes less, making the loan more cost-effective as a whole for you.
Do lenders charge for early repayment?
Whether early repayment comes with extra charges depends on the terms of the loan. Some lenders will happily allow a full repayment at any time without penalties, while others may apply a minimum interest period or an early repayment fee.
Key points to look out for include:
- Minimum interest periods – many bridging lenders require interest to be paid for a set number of months, even if the loan is repaid earlier.
- Exit fees – check for any added additional fees when the loan is closed, although this is not always the case, its best to fully read the terms of your agreement before signing.
- Daily interest calculation – certain loans calculate interest on a daily basis, meaning borrowers only pay for the time they actually use the funds.
It is wise to know your numbers and obligations prior to signing any loan agreement. At Goldhill Finance, trust and honesty is how we approach the process, and we explain all repayment options clearly from the start point.
Benefits of repaying a bridging loan early
Yes, repaying a bridging loan sooner than planned can be better for you, as it may:
- Lower interest costs – since interest will build over time, repaying before the end of your loan term means the total amount paid in interest becomes lowered.
- Provide extra flexibility – borrowers understand that your position can change, such as an early sale or mortgage approval.
- Improve your financial position – closing the loan earlier frees up equity and lessens any strain and further financial commitments.
- Leads to lender confidence – early repayment demonstrates a strong reliability to exit, which can support future borrowing if needed.
For many commercial property finance borrowers, bridging finance becomes even more attractive as a short-term solution when these points are considered.
Things to consider before early repayment
While early repayment is possible, it may not always be the best option for you. There are a few things you should always check and confirm:
- Check the loan terms – check if it states any minimum interest period or fees that may apply.
- Plan cash flow properly – make sure you readily have the funds to repay the loan are available and will not affect other commitments.
- Communicate with the lender – notifying them in advance avoids last-minute complications and builds stronger rapport and trust.
- Understand the exit process – check that an early repayment aligns with the completion of a sale, refinance, or other event.
By planning ahead, borrowers can ensure that early repayment brings financial benefits, not headaches.
How early repayment affects interest
The way interest is handled is key when repaying a bridging loan early. Different lenders have different approaches:
- Monthly serviced interest – if interest is paid each month, the borrower simply stops paying once the loan is closed.
- Rolled-up interest – if interest is rolled up, the final balance is recalculated based on the shorter term, which can lower the total repayment.
- Retained interest – if interest has been pre-paid for a fixed period, borrowers may not receive a refund if they repay early.
At Goldhill Finance, we make these options clear from the beginning so borrowers know exactly how their repayment will be calculated.
Why early repayment matters to borrowers
In property finance, certainty and control are vital. The ability to repay early gives borrowers reassurance that they are not locked into a loan longer than necessary. This freedom to adapt can make the difference between a stressful project and a smooth transition.
By choosing a 24 hour bridging loan with flexible repayment terms, borrowers can focus on their goals rather than worrying about being tied to rigid timelines.
If you are considering a bridging loan and want to know more about early repayment options, Goldhill Finance can help. Contact us today to discuss your plans and learn how bridging finance can provide the flexibility and control you need.