How does a bridging loan work?
There are two types of bridging loan, closed and open. With a closed loan there is a fixed repayment date – you will normally be given this kind of loan if you have exchanged contracts but are waiting for a property sale to complete. With an open loan there is no fixed repayment date, but you will normally be expected to pay it off within one year.
Whichever kind of loan you take out, the lender will want to see evidence of a clear repayment strategy; such as using equity from a property sale or taking out a mortgage.
They will also want to see evidence of the new property you are purchasing and the price you plan to pay for it – as well as proof of what you are doing to sell your current property if relevant. You should also have a back-up plan in place for if your repayment strategy fails – for example, if a planned sale falls through.
Bridging loans are quite expensive. Typically, there’s a set-up fee so it is advisable to only take one out if you are confident that you won’t need it for a long period of time.
Get impartial mortgage advice
Whatever the reason you need access to finance quickly, one of our advisers will be happy to discuss with you whether a bridging loan is the right solution – or if another option might suit you better.
Talk to us to arrange an appointment today.
Call us on 01964 545965
or enquire now
The Financial Conduct Authority does not regulate some forms of bridging finance.
