Bridge Loans

A bridge loan is a great solution for short-term borrowing. You might hear the terms bridging loan, interim financing, or swing loan—all of which mean the same thing.

The most common use for a bridge loan is one that’s taken out for a short period to “bridge the gap” in your finances to purchase a new home before selling your current one.

However, this isn’t the only reason for taking out a bridge loan. We regularly approve them for a wide variety of scenarios, such as:

  • Mortgage delays: Rather than losing out on a property because of red tape, a bridge loan can cover the cost until the longer-term financing is approved.
  • Mortgage refusal: If your mortgage application has been declined, a bridge loan can help you to build your credit rating and then reapply for a conventional mortgage at the appropriate time.
  • Buying and upgrading a dilapidated property: It can be tough to secure a conventional mortgage on a property that’s considered dilapidated. For example, it has no plumbing, toilet, kitchen, or bathroom facilities. A bridging loan can be put in place while the work is carried out and you can then take out a longer-term deal.
  • Developments and renovations: Either for your existing property before selling or building an additional house or houses on your land.
  • Buying an auction property: perhaps you’ve been fortunate enough to bag a bargain and need to secure the long-term finance to cover it. A bridge loan allows you to benefit from such an investment opportunity while you wait for the longer process of getting a conventional mortgage.
  • Short-term business cash-flow issues: SMEs often have to deal with curveballs that stifle cash flow. Our bridge loans can be the perfect short-term solution.

How Bridge Loans Work

We typically secure a bridge loan on the equity in your property or business. This is termed a “charge” and, depending on circumstances, there are first and second charges. These refer to the order in which repayments will be made to us and any other lender should you be unable to repay the loan. If you have an existing mortgage, that will be the first charge and the bridge loan will be the second. While this sounds scary, it’s a legal agreement that has to be taken out for a bridge loan to be approved.

We’ll determine the interest rate, which can be fixed or variable—whichever you prefer. Many people choose to go for the latter, as a bridge loan is typically only for a few months. Fixed rates are available if you prefer, although the interest rate will be a little higher.

You’ll also be able to decide whether to take out an “open bridge loan” or a “closed bridge loan”. The former doesn’t have a fixed end date (although it’s generally assumed that it will be completed within a year). The latter has a fixed date for completion. We’ll discuss your options when we go through the application process.

Ready to get started?

Let’s do this. The next step starts here. Give us a call or email to get a no obligation quote for your next project or just send us a message and a BRRRR professional will reach out to you.

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How does a bridge loan differ from a conventional property loan?
What’s the difference between a bridge loan and bridge financing?
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What type of property can I use a bridging loan for?
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