A common question when arranging bridging finance is whether a deposit is required. Market Financial Solutions notes that a bridging loan is usually secured against property and may require the borrower to contribute a property deposit to reduce the loan‑to‑value ratio. Many lenders will fund up to 75 % LTV, so a borrower may need to provide about 25 % of the property’s value as a deposit.
Two different “deposits” are involved. The first is a commitment fee (sometimes called a deposit) that secures the loan terms during legal preparation; this fee is often refunded once funds are drawn. The second is the property deposit that lowers the LTV and therefore reduces the lender’s risk.
Understanding LTV is crucial: it measures how much is being borrowed relative to the property’s value. High LTVs above 80 % are considered riskier and attract higher rates, whereas lower LTVs around 60 % lead to cheaper. Investors should therefore aim to provide a larger deposit where possible, as it will reduce the amount borrowed and may secure better terms. Professional brokers can help structure the deposit and advise on the optimal LTV for each project.