What is a bridging loan?
A bridging loan is a short-term loan secured against property, used when you need funds quickly and conventional mortgage finance isn't fast or suitable. They can be arranged within days — sometimes within 24–48 hours — and lenders are generally more flexible about the condition of the security property.
When are bridging loans used?
Common uses: buying at auction (complete within 28 days), buying before your existing home has sold, purchasing a property in poor condition, breaking a property chain, and short-term business funding secured against property. Always required: a clear exit strategy.
How much do bridging loans cost?
Significantly more expensive than standard mortgages. Interest is charged monthly — typically 0.5–1.5% per month (6–18% per year). Add arrangement fees (1–2%), valuation, legal, and potentially exit fees. Total cost can be substantial — use only for genuine short-term situations.
What is an exit strategy?
Your plan for repaying the bridging loan. Lenders always require this. Common exits: sale of the bridged property, refinancing onto a standard mortgage, or sale of other assets. Build in a realistic buffer — if your exit depends on selling your home, plan for delays.
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