What is a Bridging Loan?
A bridging loan is a form of finance, typically secured against property, that allows you to access funds quickly to purchase assets or to refinance existing assets.
Intended to be a temporary solution to tide you over until longer term funding is in place, bridging loans provide you with the working capital that your business needs, fast, while you’re getting your ducks in a row. Bridging loans typically have a maximum term of 12-24 months, and are usually either replaced with long-term funding or settled when the property is sold.
Why Do People Use Bridging Loans?
Bridging loans can be used for a range of commercial and residential purposes, but the most common usage is to break the chain on a property purchase. This enables businesses to seize opportunities without getting held up while their capital is tied up in another asset.
Other common usages of bridging loans include: auction purchases, investment purchases, and buying properties that need extensive refurbishments.