A bridging loan is a high interest, short term loan you would choose when you have a requirement for short term specific funding. For instance, a bridging loan is a loan used to “bridge” the financial gap between capital required for your new property completion prior to your existing property having been sold. Bridging loans are short term loans arranged when you need to purchase a house but are unable to arrange the mortgage immediately for some reason, such as there is a delay in selling your existing property. Timing is of the essence when selling one property and buying another. A bridging loan can be used to raise capital pending the sale of a property. Bridging loans can be arranged for any sum and can be borrowed for periods from a week to up to 1-2 years. Because of the nature of bridging loans they can usually be arranged at short notice and within a few days. A bridging loan is similar to a mortgage where the amount borrowed is secured on your home but the advantage of a mortgage is that it attracts a much lower interest rate. While bridging loans are convenient the interest rates can be very high. When considering a bridging loan, remember that you may be paying not only for the bridging loan but also for the mortgage on your existing property.
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