Bridging loans have become a valuable tool for property investors. To use this kind of finance, you will need to provide a deposit.
In general, lenders ask for 25% to 30% of the property's purchase price.
However, the exact figure depends on your situation, so it can range from tens of thousands to hundreds of thousands of pounds.
In this article, we will explain why lenders require a deposit. You will learn how much you need to set aside, what factors affect the amount, and how investors usually cover their deposit.
Why is a deposit required?
No bridging lender will fund the entire property. Lenders limit how much they are willing to risk. Your deposit covers the rest, so you are sharing the risk with them.
This limit is called the loan-to-value, or LTV.
LTV is just the percentage of the property price that the lender will fund. For example, if the LTV is 75%, the lender provides 75% of the price, and you provide the other 25%. Together, these always add up to 100%.
Remember, your deposit is not a fee. It is your investment in the property. This becomes your equity, which stays with you as long as you own the property.
Lenders see your deposit as a sign of commitment. The more of your own money you put in, the less risk the lender takes on. This often helps you qualify for a better interest rate.
How much deposit do you need for a bridging loan?
Most bridging lenders set the LTV at 70% to 75% for a standard residential investment property. This usually means you will need a deposit of 25% to 30%.
Keep in mind, the cash you need to send is often more than just the deposit. Lenders usually deduct their fees and interest from the loan amount before you receive it. Because of this, the amount that reaches your solicitor is less than the headline loan amount.
Interest is handled in 2 main ways:
- With retained interest, the lender takes the full interest amount out of the loan at the start. You do not have to make monthly payments.
- With serviced interest, you pay the interest each month. This gives you more cash upfront, but you need to budget for those monthly payments.
Here is a £250,000 purchase at 75% LTV over 6 months, with interest retained at 1% per month and a 2% handling fee.
In this example, the deposit is £62,500. But you actually need to send £77,500 to cover all the costs. If you look at different LTV bands for the same purchase and terms, you will see how the deposit changes.
Note: Stamp duty, valuation, and legal costs are added on top of your deposit and fees. If you are not a UK resident, you will pay an extra surcharge.
What influences the deposit amount?
There are 5 things that move the LTV you are offered, and the first surprises people most:
- The valuation: LTV is calculated on the lower of the price and the valuation. If a £250,000 purchase values at £235,000, a 75% loan drops to £176,250 and you find the £11,250 difference yourself.
- The property: A standard flat or house is easiest to fund. A flat above a shop, a large HMO or non-standard construction narrows the lender pool and lifts the deposit.
- The condition: A property needing work is valued at what it is worth today rather than the finished value, so your deposit rests on the lower figure.
- Your exit strategy: A clear, evidenced repayment plan is your strongest asset.
- Where you live: Fewer lenders work with non-resident borrowers, and a smaller pool means tighter terms. If you are buying from abroad, treat 70% as the realistic planning figure rather than 75%.
How to fund a bridging loan deposit?
There are 3 ways you can fund a bridging loan deposit:
Option 1: Personal savings and cash reserves
Using your own savings is the simplest way to fund your deposit. Lenders generally favour this option, and you will face fewer questions if your funds are straightforward.
Expect to provide 3 to 6 months of bank statements for most purchases. If you are buying a more expensive property, you may need to show up to 12 months of statements.
Remember, the balance alone is not enough. Lenders want to see exactly where your money came from. If a large amount appeared in your account recently, you will need to explain its source.
If your savings are held overseas, specialist lenders can help. However, the documentation requirements are stricter. Allow extra time for certified statements and a letter confirming the origin of the funds.
Option 2: Equity in a property you already own
If you already own another property, you can sometimes use its equity as part of your deposit. This process is called cross-charging, and it means the lender takes security over both properties.
Adding another property increases the total collateral. This lowers the effective loan-to-value (LTV), and can reduce the cash deposit you need. Sometimes, it removes the cash requirement entirely or helps you qualify for a better interest rate.
For example, imagine you are buying a property for £500,000 at 75% LTV. Normally, you would need a deposit of £125,000. If you have a second property worth £300,000 with a £100,000 mortgage, you have £200,000 of equity available, enough to cover the deposit.
When your equity is high enough, this is how a 100% bridging loan works. Remember, if you cannot repay, both properties are at risk. For more details, see our guide to buy-to-let equity release.
Option 3: Buying below market value
If you can buy a property well below its market value, the discount itself may count as your deposit. This approach is common with auction properties, distressed sales, or off-market deals.
Most lenders base the loan on the lower of the purchase price and the valuation. Some, however, will lend against the open market value, which can make a big difference.
For example, if you buy a property worth £250,000 for £200,000, a loan at 75% of value is £187,500. That means you only need to find £12,500 for the deposit, instead of £50,000.
Lenders will check how long the seller has owned the property and why the price is low. You will need to provide evidence for the discount.
In general, secured options like these cost less than borrowing your deposit separately. Lenders prefer to see where your funds come from, and they may reduce the LTV if your deposit is unsecured.
Get your LTV confirmed in writing before you exchange
The expensive mistake is committing to a purchase on an assumed LTV, then learning at valuation that the lender will fund 65%, with days left to find the difference.
Ask for the LTV, the fee and the interest method in writing, then work backwards to the cash.
An overseas couple buying a £250,000 property in Birmingham hit the same squeeze from the other side. Their mortgage stalled in overseas underwriting and their deposit was at risk, so a 6-month bridging loan completed the purchase in 13 days.
GoGoProp takes the guesswork out of that first number. The LTV is fixed at 75% on residential investment and buy-to-let property in England and Wales, at 1% per month over terms of 3, 6, 9 or 12 months.
That is a flat specialist rate rather than the cheapest band available, so compare quotes. Approval takes 24 hours, and a clean case can complete in as little as 10 days, with no early repayment penalty.
Apply online and we will confirm in writing exactly what your 75% covers, within 24 hours:
GoGoProp lends under Money Lending Licence No. 1341/2025.
Key takeaways
- Plan for 25% to 30% of the price, and 70% LTV rather than 75% if you are buying from abroad.
- The cash you send is bigger than the deposit, because fees and retained interest come out of the advance.
- On a £250,000 purchase at 75% over 6 months, the deposit is £62,500, and the cash is £77,500.
- LTV is set on the lower of price and valuation, so a £15,000 valuation shortfall costs you £11,250.
- Add stamp duty, valuation and legal costs on top, and start source-of-funds checks early.
- A 100% bridging loan means a second property as security, so your equity still does the work.
Frequently asked questions
What happens if the valuation comes in below the agreed price?
The lender funds a share of the lower figure, so your deposit rises by the gap. On a £15,000 shortfall at 75% LTV, you would find another £11,250.
Do you need a UK bank account to pay a bridging loan deposit?
Not always. Many lenders accept funds sent from overseas, provided they complete source-of-funds checks on the account and the source first.
Do you get your bridging loan deposit back?
Not as a separate payment. It stays as equity in the property, and you realise it when you sell or refinance to repay the loan.
Can you extend a bridging loan if your exit is delayed?
Often yes, although the lender has to agree and further interest applies. Raise it early, because an extension is easier to arrange before the term ends.
Is the 10% paid at auction part of your bridging deposit or extra?
Part of it. The 10% paid on the fall of the hammer counts towards your share of the price, with the balance due at completion.
