What is Bridging Finance?
Bridging finance is a short-term loan designed to “bridge” the gap between purchasing a new property and securing long-term funding or selling an existing asset. It is commonly used by property buyers, investors, and developers who need quick access to funds. Bridging loans are secured against property and can be arranged much faster than traditional mortgages.
How Does Bridging Finance Work?
Bridging loans can be used for various purposes, including buying a property before selling an existing one, funding renovations, or purchasing auction properties. These loans typically have higher interest rates than standard mortgages and are repaid in a lump sum, either when the property is sold or refinanced with a longer-term mortgage.
Types of Bridging Loans
✔ Open Bridging Loan – No fixed repayment date, typically used when selling a property without a set completion date.
✔ Closed Bridging Loan – Has a fixed repayment date, often used when a property sale is already agreed upon.
-
Who can use bridging finance?
Bridging loans are available to homeowners, landlords, property investors, and businesses that need short-term funding. They are ideal for those buying before selling, funding renovations, or purchasing properties unsuitable for standard mortgages.
-
How quickly can I get a bridging loan?
Bridging loans can be arranged much faster than traditional mortgages, often within a few days to a few weeks, depending on lender requirements and legal processes.
-
What are the interest rates and fees for bridging finance?
Interest rates for bridging loans are typically higher than those for traditional mortgages, reflecting the short-term nature of the loan. Fees may include arrangement fees, exit fees, and legal costs, so it's important to understand the full cost before proceeding.
