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What is Bridging Finance/ Loan?

A bridging loan is taken out to ‘bridge’ the gap between the purchase of a new property and the sale of an existing one – usually when you are moving home. The loans are generally short term and secured on the existing property but repaid once the current property is sold.

In a commercial sense, Bridging Finance is more commonly used to buy a property that is in disrepair, will undergo extensive redevelopment or requires planning permission to change its use to name a few, in these examples a conventional mortgage may not be available. They are also commonly used for auction purchase where a transaction is needed to meet deadlines.

These types of loans will help you secure your new purchase and are more expensive than conventional finance/ mortgages. With any Bridging loan, you need to have a long-term solution (often referred to as the Exit) on how the bridging loan is to be repaid.

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