A bridging loan is a short-term loan designed to cover financial gaps, often used when fast funding is needed—such as buying a property before selling an existing one.
How Does It Work?
• A secured loan, meaning an asset (usually property) is used as collateral.
• Repaid in a lump sum, often after selling a property or securing long-term financing.
• Interest is charged monthly or added to the lump sum repayment.
• Borrowers must provide a clear repayment plan (e.g., selling the property).
When is it Used?
• Buying a new home – securing a property before selling another.
• Auction purchases – when quick completion is required.
• Renovations – improving a property before selling or refinancing.
• Investment opportunities – securing a deal before long-term funding is in place.
Who Uses Them?
🏡 Homeowners | 🏢 Landlords | 🏘 Property Investors | 💼 Businesses
Key Considerations
✔ Loan terms – interest rates, fees, and repayment structure.
✔ Property value & equity – the lender will assess this.
✔ Project feasibility – ensuring the investment is viable.
✔ Exit strategy – a clear repayment plan is essential.
Takeaway:
A bridging loan can be a useful tool for securing property deals quickly, but it’s crucial to have a solid repayment plan and understand the costs involved. 💡
Need help with auction finance? Get in touch with an expert today! 📞🏡
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