Bridging loans are a short-term funding option. They are used to ‘bridge’ a gap between a debt coming due – and we’re talking primarily about property transactions here, – and the main line of credit becoming available(Mortgage). Or they can simply act as a short-term loan in pressing circumstances.
They can be invaluable in facilitating a property purchase that otherwise would not be possible. But as you might expect with a stop-gap measure, they can be more expensive than a ‘normal’ loan.
What are bridging loans and how do they work?
Bridging loans are designed to help people complete the purchase of a property before selling their existing home by offering them short-term access to money.
As well as helping home-movers when there is a gap between the sale and completion dates in a chain, this type of loan can also help someone planning to sell-on quickly after renovating a home, or help someone 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.
This can be a great way of providing finance for those looking to buy a property at auction. Central Financial Services can also offer to advise on the move of a bridging loan to a mortgage.