Professional Mortgage Advice

Bridging Loans

A bridging loan or bridge loan is a short-term loan given to 'bridge the gap' between buying a new house and selling your previous house.

Bridging loans can also be useful when used as a short term loan to help you buy a property at auction, when money is needed immediately as you may not have sold your current property yet.

A bridging loan (or bridge loan) comes into its own when the need arises to borrow money for a short-period. The most common use of these loans is to help fund a new house purchase while you're waiting for your existing property to sell.

There are two types of bridging loan, closed and open. A closed loan comes with a fixed repayment date and you will normally be given this kind of loan if you have exchanged contracts but are waiting for a property sale to complete. An open loan doesn't have a fixed repayment date, but you will normally be expected to pay it off within one year.

Whichever type of loan you take out, the lender will usually want to see evidence of a clear repayment strategy; such as using equity from a property or taking out a mortgage.

Bridging loans can be invaluable in facilitating a property purchase that otherwise might not be possible. But as you might expect with a stop-gap measure, they can be significantly more expensive than a 'normal' loan.

A Bridging Loan is a short-term loan secured against your home or property. Your home or property may be repossessed if you do not keep up repayments on your mortgage or any debt secured on it.

The Financial Conduct Authority does not regulate some forms of bridging finance.