Bridging Loan

A bridging loan is a short-term facility typically lasting one to 24 months, secured against residential or commercial property. It is used to 'bridge' a financial gap: completing a property purchase before an existing property is sold, funding a property acquisition at auction, financing a refurbishment project, or providing capital while a longer-term mortgage or business loan is arranged.

Bridging loans can be arranged very quickly - often within five to ten working days in straightforward cases. This speed comes at a price: bridging interest rates are quoted monthly (typically 0.5-1.5% per month) rather than annually, making them expensive for extended use.

A clear exit strategy is mandatory for any bridging loan application. The lender must understand how and when the loan will be repaid. Common exit strategies include the sale of the security property, refinance to a commercial mortgage, or completion of a longer-term business loan application.

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