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Bridging Loans

A bridging loan can be used to buy a property or clear a mortgage. Due to high interest rates, it should only be used as a short-term solution.

A bridging loan is intended as a short-term financial solution, commonly used for purchasing property to ensure the sale is completed on time. Because they’re short term, they are typically offered at a higher rate than other loans, including mortgages, and presented in terms of monthly rates rather than the more common annual percentage rate (APR).
  • 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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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.

Is a bridging loan a good idea?

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.

Bridging loan vs mortgage

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.

Commonly asked questions about bridging loans

We’ve answered some of the most common questions about bridging loans, helping you decide if it’s the right choice for you.

Am I eligible for a bridging loan?

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.

What do I need to apply for a bridging loan?

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.

Loan details

Applying for a bridging loan

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.

What can I use a bridging loan for?

Bridging loans are mostly used for property-related purchases, to help get your foot on the ladder, such as:

Home

Mortgage payment

You can use a bridging loan to redeem an existing mortgage, allowing you to purchase property even if you are still going through the process of selling your current home.
Paint

Property development

A bridging loan ensures developers have the finances to begin renovations and get the property back on the market in no time.
Build

Self-build

A bridging loan can be used to fund the development of a self-build project.
Money

Paying a deposit

If you buy a house at an auction, you will need to provide the deposit upfront - this is where a bridging loan can help.

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