Bridging Loan

Bridging loans are short term loans arranged for the purchase of a new property when difficulties arise selling an existing property or arranging a mortgage. As the name suggests, bridging loans are used to 'bridge' the financial gap between the amount required for completion on a new property prior to the sale of an existing property. These loans therefore offer a solution in cases where there is a delay on selling an existing property, allowing a purchase to be made before a sale.

Whilst Bridging loans clearly serve a useful purpose, the associated interest rates can be high, especially when compared to an equivalent mortgage. As with a mortgage agreement, the loan amount is secured against the borrower's home and can range from £25,000 to the order of millions of pounds, whilst terms can vary from as little as a week to as long as six months.