A short term funding option used to ‘bridge’ a gap between a debt becoming due for payment and a line of credit becoming available.
A bridging loan is a short term funding option used to ‘bridge’ a gap between a debt becoming due for payment and a line of credit becoming available. In pressing circumstances, a bridging loan can be used as a short term loan.
What are they used for?
They are used to fund people or businesses allowing time to refinance to longer term debt.
They can also be used to assist in the purchase or sale of a property. Bridging loans can be used to:
- Purchase a property quickly – such as auction purchases
- Fund property restoration or conversion work
- Repossession prevention
- Buy property under market value
How long can I borrow the money for?
Bridging loans are usually offered for between 1-18 months, with the loan repayable in full at the end of the term. Unlike other forms of borrowing the monthly interest is often rolled into the loan, meaning there are no repayments to make during the term of the loan.
How much can I borrow?
Lenders typically lend between £5,000 and £2.5 million. Due to the reluctance of lending by banks, bridging loans have become very popular resulting in a competitive market. Rates start from 0.45% per month depending on circumstances. There may also be administration fees and early repayment fees, these will be detailed by the lender.
How long does it take to arrange a Bridging Loan?
The application process is usually far simpler than for other types of borrowing and applications can complete very quickly, usually in 5-14 days.
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