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What are bridging loans and how do they work?

Bridging loans have various uses but are in essence a method of borrowing funds for a short term, i.e. to Bridge a gap

Some bridging solutions;

Complete the purchase of a property before the sale of existing home completes, i.e a break in the sales chain.

A property investor may use a bridge when buying a property that may need renovation to sell-on quickly after renovating or buying at auction.

As banks and building societies have grown more reluctant to lend in the wake of the financial crisis, there has been an influx of bridging lenders into the market. However, rates are generally higher than Mortgages and there can be hefty administration fees on top. They are, however, a very useful tool enabling a purchase under otherwise difficult circumstances.


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