What is a bridging loan?
A bridging loan is a type of secured, short-term loan. They’re typically taken out when purchasing a new property before a current home is sold. It is most suitable for landlords and developers.
Bridging loans are used to bridge the gap between buying or renovating a house and subsequently selling or remortgaging
A secured, short term loan used to buy new property before old one is sold
Should only be taken out with a view to repaying in full as soon as the money becomes available
The loan amount should take fees and service charges into account
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A bridging loan is a type of secured, short-term loan. They’re typically taken out when purchasing a new property before a current home is sold. It is most suitable for landlords and developers.
A bridging loan can help move a house sale along, so you don’t need to delay plans for renovation or just moving in. However, it’s important to note that it is a short-term loan and therefore is offered at a higher rate of interest. You’ll need to account for arrangement fees, legal fees and exit fees in some cases, so it’s a good idea to be sure you can confirm the sale beforehand.
Although both are different types of loan, there is one big difference between mortgages and bridging loans. A bridging loan is often used when you are waiting on the sale of a property to go through, to cover costs and ensure no delays. It can help you break the chain of moving house, ensuring the sale doesn’t fall through, giving you the funds needed to move things along. A bridging loan is a short-term solution and the debt is paid through the eventual proceeds of your sale. Meanwhile, a mortgage is a longer-term debt, usually repayable over 20 to 30 years.
We’ve answered some of the most common questions about bridging loans, helping you decide if it’s the right choice for you.
Some types of bridging loans are offered only when you have a firm idea of when you can repay the money – so for example, if you are expecting a property sale within the next month, you can apply with the lender’s understanding that the debt will be repaid within 30 days.
You should think carefully before applying for this kind of loan if you do not have an ‘exit plan’ – as the interest tends to be much higher on a bridging loan, and are calculated differently to a typical APR.
You can get started with your application online. We will ask for a few details to begin your application, including the loan amount you require, personal details and address.
Once these have been received, we will be in touch to find out more information about your situation. Have the details below to hand to ensure we can move your application along without any delay.
Applying for any type of loan shouldn’t be taken lightly. We’re here to help you every step of the way. Once you apply, we’ll search hundreds of plans to find a loan that works for your situation. We work with a wide network of responsible lenders to provide the funds you need to secure your new property.
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