Bridging loans are a short term funding option typically used by property buyers to ‘bridge’ the gap when buying a new property and waiting for a traditional mortgage to be approved or capital to be released from the sale of their current home.
Bridging Loans are most commonly used to help fund a new house purchase while you’re waiting for your existing property to sell. But bridging loans can also be used for a variety reasons such as major structural home improvements and renovation projects. Bridging loans are also often used to help those looking to buy at auction where you have a short timeframe to exchange contracts.
As with any loan, the lender will need evidence of a clear repayment strategy. This could be using equity from the sale of a property or evidence that you have a mortgage offer in place. As they are a stop-gap measure, bridging loans tend to be more expensive than a ‘traditional’ mortgage.