Bridging finance is a fast, flexible and short-term secured loan that’s used to ‘bridge the gap’ between selling and buying a house, or until the next source of funding becomes available. They can also be used to help someone buying a property at auction, to fund home improvements, or to prevent borrowers from missing out on buying a new property if the buyer drops out.
There are two main types of bridging loan – open and closed.
- Open – with no fixed repayment date, loans can be repaid when the funds become available, although typically within one year. They’re aimed at: buyers who have their property on the market and are yet to sell but want to put an offer on another house.
- Closed – with a set end date, usually within a few weeks, or months, this type of loan is typically used when buying a new property, whilst awaiting completion on the current one.
Unlike a mortgage, bridging loans are generally offered for a year or less. While not necessarily the cheapest solution, as the interest is generally higher, they can be approved in as little as 48 hours upon application, following checks into your credit history, mortgage status, and the values of both your current and prospective properties.