Bridging loans fall under the category of secured loans, effectively “bridging the gap” between buying and selling property. Whilst mortgages are a great way of financing a property purchase, they can often be time-consuming, and are therefore inappropriate for such fast-pace circumstances. Bridging loans can help you to seize opportunities, being a great way to get access to the finance you need, when you need it.
Proper Finance can help you compare a range of different bridging loans from our list of reputable lenders.
As previously mentioned, a bridging loan is a type of secured loan that helps to “bridge the gap” between completing on a new property and selling an old one. They can be used for both commercial and personal property purchases, and offer buyers quick access to finance.
There are two main types of bridging loans available, these being:
An open bridging loan is usually taken out for urgent transactions. These types of bridging loans usually won’t require a detailed plan on how the borrower intends to settle the debt, and therefore will have no fixed repayment date. However, whilst there is no set repayment date for this type of finance, borrowers will typically be required to repay the loan within a year of taking it out.
In contrast to this, a closed bridging loan will require the borrower to know exactly how the loan will be paid off, and will have this paid off within a year. A lot of closed bridging loans are settled in only a few months. These types of loans are commonly used by those who are in the process of selling a house but are waiting for the funds to come through so that they can complete on a new property.
Bridging loans can be used for various different purchases. These types of loans are commonly taken out by homeowners, landlords and property developers, who want quick access to finance; whether that’s to purchase a property, start property development, or more.
Bridging finance enables borrowers to complete on a property faster than if they were to take out a mortgage. Borrowers could secure on a property in as little as 2 – 4 weeks, sometimes even sooner than this.
Whether for commercial or more personal purchases, borrowers can get quick and easy access to the finance they need through a bridging loan.
You will usually have to meet certain criteria in order to be eligible for a bridging loan. Whilst this criteria can vary from lender to lender, some of the typical requirements borrowers will have to meet include the following:
It’s worth noting that this may not apply for all bridging loans, and will very much depend upon the lender, the loan type (open or closed) and the details of the borrower.
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Our comparison site is free to use, and can help you to compare a range of different bridging loan options. Compare bridging loans with Proper Finance today!