What is a bridging loan?

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A bridging loan is a short term piece of finance that you can utilise to get you over a sticky situation. So it might be that you need to bridge the gap between the sale of one house and the purchase of another. It might be that you’re buying a home that is currently un-mortgageable, maybe it doesn’t have running water, maybe it doesn’t have a kitchen or a toilet. So you need to purchase it in its current state with a view that you’re going to refurb it and then let the property out or move into it. So a bridging loan is short term finance for something like 12 months to two years, that’s going to get you through a short term stop gap. It is available much, much quicker. It doesn’t take the time that a mortgage would take and ultimately it’s going to get you through that stop gap and get you to ownership much, much quicker.

It could be possible!

I’ve also seen it possible to not only bridge against property, but we’ve also had one client who has been able to bridge against his very, very expensive watch collection. And now there was a lot of caveats in relation to that, but it just goes to show the main thing that a mortgage lender is interested in when it comes to bridging finance is how the hell are you going to pay it off? What is the exit strategy? So for example, is it going to be refinancing the property after you’ve made it habitable? Is it going to be selling the property after you’ve made it habitable? Is it that you’re buying that one and you’re selling your current property and the money from the sale of your existing property is going to pay off the bridging loan on the new one?

So a bridging loan is just short term lending that’s going to get you through a sticky situation. And the key thing is to make sure that you have a solid, sound and good exit strategy. Any questions on bridging hit us up below. Be more than happy to help.

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