Bridging Loan
What Is a Bridging Loan?
A bridging loan is a short-term loan that helps you access money quickly while you wait for other funds to come through. It’s called a “bridge” because it bridges the gap between buying something new and selling something old — usually property.
When Are Bridging Loans Used?
Bridging loans are commonly used when:
- You want to buy a new property before selling your current one
- You need quick funds to secure a property deal
- A property is being bought at auction
- Renovation work is needed before a mortgage is approved
- There is a delay in finance from another lender
- Property Development
- To mend a broken property chain
How Does a Bridging Loan Work?
Here’s a simple example:
You find your dream home, but your current house hasn’t sold yet. You don’t want to lose the new property, so you take a bridging loan.
The bridging loan gives you the money to buy the new property now. Then, once your old house sells, you use that money to pay off the bridging loan.
Key Features of a Bridging Loan
- Short-term – usually 1 to 12 months (sometimes longer)
- Fast access to funds – much quicker than traditional mortgages
- Secured loan – the loan is secured against property
- Flexible repayment options
How Do You Repay a Bridging Loan?
Bridging loans are usually repaid by:
Selling a property
- Refinancing onto a mortgage
- Receiving a large payment or investment
Some lenders allow:
- Monthly interest payments
- Interest added to the loan and paid at the end
Things to Consider
Bridging loans are not designed for long-term borrowing. Because they are short-term and fast-access loans:
- Interest rates are usually higher than mortgages
- They must have a clear exit strategy (how you will repay it)
- They are best used for temporary financial gaps
Is a Bridging Loan Right for You?
A bridging loan could be right if you:
- Need money quickly
- Are waiting for funds from a sale or refinance
- Have a clear repayment plan
- Need short-term finance only
Email: info@wolseymortgage.co.uk
Call our experienced team of Advisers on:
01473 216950
Need Help? Call Us at:
01473 216950