A bridging loan is a temporary short term loan taken out usually to solve a cash shortfall when buying property. Usually residential bridging loans are used when somebody purchases property before they sell their own, or need funds quickly to purchase investment property or properties at auction and do not have the time to put adequate funding in place
A bridging loan can be used for any purpose. The most common uses for bridging loans are:
To enable the purchase of one property before the completion on the sale of another.
The purchase of investment properties in a dilapidated condition and temporary funding to provide the funds for the completion of repairs until a long-term mortgage can be arranged.
Buying properties at auction using Auction Finance
The purchase of buy-to-let property
To enable the purchase of a property abroad.
In some cases to stop repossession - call for more details
The purchase of land
To enable developers access to fund to build new properties where banks have declined to lend
Bridging loans present a greater risk to the lender so the product is usually more expensive than normal mortgages or loans. Because of this, bridging loans should only be considered as a viable option if you are likely to be able to pay it in a short term usually up to a maximum of 12 months and in all cases a robust exit strategy will need to be in place