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
MVRDV reveal designs for a strange holiday villa in Taiwan.
New milestone achieved with launch of new safety lanyard for working from height.
A quick introductory article about preliminaries in construction.
Brandenburg Gate - an historic structure that went from symbolising German partition to European unity.
A discussion between construction key players and leading insurers on the future outlook for construction insurance.
New guide from BSRIA on building performance evaluation in domestic buildings.
Rogers Stirk Harbour and Partners complete new trio of towers at Sydney Harbour.
With a new government consultation underway, ICE look at creating a smarter, more flexible energy system.
International Ethics Standards Coalition publishes first set of ethics principles for built environment professionals.
British Antarctic Survey announces research station is to relocate 23km due to growing crack in the ice shelf.
A great example of mimetic architecture with the Fish Building of India.