Small Bridging Loans: Why They’re Important Even as Property Prices Rise

In the property market, the focus is usually on big numbers. The total value of UK housing stock hit £9 trillion for the first time last year[1]. It’s now worth some 3.5 times the annual GDP of the UK.

Property prices themselves are also very high historically. In early 1990, the average property price in the UK was £53,658. The latest land registry data has the average price at £271,188[2].

Given these figures, it’s understandable that many may assume they’ll need large loans exclusively to progress their plans. But there will still be a clear need for small bridging loans in the current market.

Smaller loans are often overlooked, but they provide a lot of utility for property investors and landlords. In this blog, we’ll break down the benefits that small bridging loans can bring, and why brokers and borrowers shouldn’t overlook them.

What Exactly Is a Small Bridging Loan?

Of course, different bridging lenders will have their own definitions of small bridging loans. It all depends on the minimums on offer.

By looking at official data though, we can roughly gauge what’s considered small across the market. The Bridging & Development Lenders Association (BDLA) found that the average bridging loan size was around £540,000 in early 2025[3].

Although, some lenders will offer bridging loans as low as £25,000[4]. While there is no set definition for small bridging loans, anything within the £25,000 – £150,000 range could be considered relatively small.

→ For a clear, step-by-step breakdown of how bridging loans work (and when smaller loans make sense), read our Complete Guide to Bridging Loans.

Under What Circumstances Would Borrowers Need Small Bridging Loans?

There are a few scenarios in which a property investor would need a small bridging loan. The most obvious being that they are purchasing a low-priced asset. In places such as Lancashire, Yorkshire, County Durham, and parts of Wales, it’s still possible to buy a house for less than £150,000[5].

Auctions also present property investors with opportunities to secure cheap assets. The latest Essential Information Group (EIG[6]) data showed 2,486 residential lots were sold at auction in December 2025, raising £495.5m in the process. This would make the average sale price just shy of £200,000. For comparison, Rightmove[7] reported that the average new seller asking price in December was £358,138 across the UK market.

Then there are those circumstances in which borrowers need bridging funding quickly to cover short-term issues. Chain breaks risk derailing an investment strategy, but can be amended with small bridging loans. Also, cosmetic refurbishments may only need small amounts of capital to add substantial amounts to a property’s value.

The Potential Benefits of Small Bridging Loans

Borrowers may be inclined to seek out the biggest loan possible for their circumstances, just to be on the safe side. While this is understandable, and sensible, it may not always prove to be the best way forward for property investors.

With larger loans, there is always the risk of over-leveraging. While our underwriters go out of their way to ensure our funding matches our borrower’s requirements perfectly, it’s possible to take on excessive debt more generally in the wider market.

If one borrows too much, interest costs can become excessively high, and repayments are harder to meet. It can also be harder to refinance, and there may be less flexibility should unexpected challenges emerge (delays, market fluctuations etc).

With small bridging loans – i.e. appropriate loans for smaller investment end goals – borrowers are more likely to benefit from smoother processing, and faster approvals. Interest costs and fees are also likely to be lower with smaller loans.

Generally, small bridging loans are lower risk for borrowers and lenders alike. With reduced risks, terms can be more favourable, which in turn can lead to better/easily achievable exit strategies.

Looking Ahead

Given all the factors that are shaping the property market at the moment, we may see rising demand for quick, focused, and smaller bridging loans in 2026.

Auction demand is set to remain sky high this year[8], driven by landlords looking to exit the market rapidly in the face of the Renters’ Rights Act. Moreover, with a mansion tax on the way, we could see many homeowners attempt to downsize over the coming months[9].

Also, while the market has more going for it than many may realise, uncertainty still lingers among property investors. As such, we could see more demand for “smaller exposure” strategies this year. Instead of investing in large industrial properties, perhaps we’ll see borrowers shift towards small flats.

Regardless of what’s on the way however, Market Financial Solutions will continue to offer a range of options for property investors. If property investors are after single loans of £100,000, or portfolio capital to cover multiple assets, we’ve got them covered.