Bridging loan as the name implies is a loan used to “bridge” the financial gap between revenue required for your new properties completion before your existing property has been sold. It can be usually be secured on a property of higher value than the required borrowing.
Bridging loans can usually be arranged at short notice, sometimes within 48 hours if all relevant paperwork is in order.
Bridging loans can be arranged for any sum between £26, 000 to £5 Million pounds and can be borrowed for periods which range from a week up to twelve month You must consider that when taking out a bridging loan you may be paying not only for the bridging loan but also for the mortgage on your existing property.
Although bridging loans are convenient, you should be aware that you will pay a higher rate of interest.
A bridging loan is similar to a mortgage in that the amount borrowed is secured on your property, but of course a mortgage attracts a much lower interest rate over a longer term, whilst bridging loans are convenient the interest rates will be higher.
Bridging loans can usually be arranged by your existing mortgage provider/broker
A Bridging loan can be invaluable in situations of a temporary shortfall in cash,
Loan terms for bridging loans are much shorter than other types of loan.
If your application is accepted for bridging finance you will receive a loan, which you will be required to repay normally in monthly instalments plus the interest,
There are different types of bridging loans: An Open Bridging loan is available when you have not yet finalised the terms on which you are selling your own property, but are going ahead with the purchase of another.