Guide to Property Finance

What is a residential bridging loan?

Residential bridging loans are short term, interest-only loans generally used to help you meet a pressing financial need when dealing in the property market.

Applications are often decided on the value of the property and your exit strategy, more than your ability to meet payments.

When would you use it?

• Broken property chains. When a buyer pulls out, your offer on your next home and the deposit can be put in jeopardy. A Bridging Loan can tide you over until your home is back on the market and under offer once again
• Buying a second property before selling the first
• Auctions. Usually, once an offer is accepted at an auction and a 10% deposit has been paid, there is a 28-day period to complete the purchase. But at auctions, you might go in without pre-organised none. A Bridging Loan can be organised so you can pay for the house within the 28 days and give yourself time to sort out a longer term loan
• Short lease. It could also be used if, for example, you wanted to buy a property with a short lease. You could use the Bridging Loan to buy the property, then add value by extending the lease. This would provide a valid exit strategy
• Refurbishment projects. You can use a Residential Bridging Loan to refurbish a property before full capital is available

The fine details

• Available as a 1st charge or 2nd charge mortgage
• Can be completed in anywhere between 3 days and 3 weeks
• Term time between 1 and 12 months
• Loans between £30,000 and £3m
• You can roll the interest into the loan
• No early repayment charge

Benefits for small businesses and semi-professionals

• Great for when you need money quickly
• Can be used in a variety of ways
• No hidden fees to worry about
• Applications decided on the value of the property, not whether you can meet payments or the purchase price of the property