Bridging loan for property
A bridging loan is a short-term funding solution which can be used to ‘bridge’ a gap between money being owed and credit becoming available. Typically, bridging loans are used in property transactions and can be essential in ensuring a property purchase can be achieved.
They often only take between seven and ten working days to organise, but can incur a large administration fee and high interest charges.
Bridging loans are short-term finance options that enable a house buyer to complete a purchase before they sell their existing home through a high-rate interest loan. This type of finance option can also help home-movers if there is a gap between the sale and completion dates in a chain, for example somebody looking for a quick-sale after renovating a property or to help assist with purchasing at an auction.
There are two types of loans: closed and open. A closed bridge loan has a fixed repayment date. An open bridge loan does not have a fixed date, but is usually required to be paid off within a year. With closed bridge loans, the borrower will usually already have exchanged to sell a property and fixed the completion date.
 Predominant target market
The typical recipients of bridging finance are landlords, small-scale property developers, and individual’s purchasing at an auction where finance is required quickly. Other recipients can include wealthy borrowers who require simple lending on residential properties.
It is possible to secure bridging loans against a variety of residential, semi-commercial, commercial or land and options can include:
- Properties to purchase: A new property, buy-to-let purchases, auction purchases.
- Properties to build and renovate: Housing developments, self-builds, barn conversions, refurbishment projects to sell for profit.
- Properties where funds are to be raised: Un-mortgageable properties, purchasing before selling, short-term cash flow solutions.
 Sources of bridging finance
There are a wide variety of bridging lenders which range from small, one-man bands to larger professional organisations that are regulated by the Financial Conduct Authority.
NB Businesses can also use bridging loans secured against land and property to raise capital, to pay off tax liabilities, or to meet business obligations.
 Related articles on Designing Buildings Wiki.
Featured articles and news
RIAS criticise the transfer of responsibility from construction professionals to other parties less involved with the design process.
Take a look at this new music/arts centre in Calgary, with subtle curves and a skybridge.
Building Automation and Control Systems (BACS) market in North America continues to grow.
Frank Lloyd Wright's last major project, the Solomon R. Guggenheim Museum in New York.
Designing Buildings Wiki attended the Surface Design Show and spoke with 2 leading figures in natural stone and hotel design.
How can data from homes help plan smarter cities?
CIOB launch new toolkit to help tackle modern day slavery in construction.
Have a read of our introductory article on bored piles.
Have a look at this striking new 'H-shaped' office building in China.
Read about the pile foundation solutions BAUER have delivered for Battersea Power Station.
As it's Valentine's Day, read the story of this 'labour of love' castle built on Heart Island.
An introductory guide to the project team for building design and construction.