What is a Bridging Loan?

A bridging loan is a short-term financial solution designed to help individuals and businesses bridge a funding gap. This type of loan is secured against a property, typically by a first or second charge.

How Does a Bridging Loan Work?

Bridging loans are Characterised by their speed and flexibility. They usually have a term of 1 to 24 months. There are two primary types:

• Retained Interest: Interest is deducted upfront from the loan amount. This option often requires fewer affordability checks.
• Serviced Interest: Interest is paid by the borrower on a regular basis, typically monthly.

Common Uses of a Bridging Loan

Bridging loans can be used for a variety of purposes, including:

• Property Purchases: Financing a new property while selling an existing one.
• Property Development: Funding renovation or development projects.
• Refurbishment: Covering costs for property improvements.
• Tax Payments: Bridging a temporary cash flow gap to meet tax obligations.
• Auction Purchases: Securing a property at auction without immediate funds.