Bridging Loans - Flexible Finance

Bridging loans or are short term loans designed to 'bridge' the gap between the purchase of a new property and the sale of your current property. They effectively allow people to exchange contracts prior to more conventional methods of long term funding being arranged (usually in the form of a mortgage).

Loan amounts usually range between 25k - 500k with a repayment term of 1 - 12 months. They are much quicker to arrange than standard mortgages (often arranged within 24hrs) and also easy to access as long as the applicant has a sound credit history and reasonable equity in their property (usually 70% 80%).

Bridging loans can be a great way of easing the short term financial pressures when buying a property. They can also help strengthen your bargaining position when negotiating over a price. But, as with any form of finance, borrowers should do extensive research to make sure it is the correct solution for them. The two main criteria people look for when choosing a lender are:

1. The speed at which the loan would be available.
2. The rate of interest charged on the loan.


Examples of bridging loan uses are as follows:

• A bridging loan maybe acquired by a developer wanting to start a project before planning permission is granted. The developer would find it difficult to acquire conventional long term finance due to the increased risks. A bridging loan could 'bridge' this gap and provide short term finance until planning permission is granted.

• A couple want to move home and plan to use finance raised from the sale of their current property as a deposit. They find the new 'home of their dreams' before the sale of their current property is completed. The couple take out a short term bridging loan to allow them to purchase their new home, whilst they wait for the completed sale of their current property to go through.