Bridging loans are a convenient short term borrowing option that do exactly what the name suggests. They will ‘bridge’ the gap in between a debt coming due and the main line of credit becoming available – primarily used in property transactions.

They can also be implemented in the scenarios whereby a short term loan is required in pressing circumstances.

These types of loans are used for facilitating property purchasing that would otherwise not be possible. Due to the convenience and ease of borrowing, they can cost more than a conventional bank loan.

What are bridging loans and how do they work?

Bridging loans are designed to help people complete the purchase of a property before selling their existing homes by offering them with a short-term supply of money at a typically higher interest rate.

Alongside helping home-movers and property buyers when there is a gap between the sale and completion dates within the process, it can also help someone that is planning to sell their home on after a recent renovation, as well as those that make a purchase at an auction.

Bridging loans are designed to help people complete the purchase of a property before selling their existing home by offering them short-term access to money at a high-rate of interest.

Who are bridging loans aimed at?

Bridging loans are aimed at landlords and property developers, including those buying at auction whereby the mortgage is needed quickly.

They are designed to suit those that need to make the purchase before they sell their existing home, by offering a short-term access to money at a high-rate of interest.

They may be offered to wealthy or asset-rich borrowers who would like straightforward lending on residential properties.

Recently, there has been a growth trend among borrowers to use this type of loan, as high street and private banks are taking longer to process applications for larger home loans. Some people are seeing bridging finance as an alternative to mainstream lending.