New Mortgage Guides

Other Mortgage Guides

Mortgage Types

Mortgage Tools

Financial Services > Mortgages > Bridging Loans > Bridging Loans Explained
Bookmark and Share

Bridging loans

Bridging loans mortgage guide

What is a bridging loan?

It's a type of loan which homeowners can take out to solve temporary cash problems.

For example, if you want to move but you need to complete on your purchase before your sale has gone through, you can take a loan to cover you to bridge the gap. 

A bridging loan is a loan usually taken out as an immediate source of a large sum of money, often to cover the costs of purchasing a property.

Bridging loans are usually repaid within half a year of being taken out, though it is often less.

Is a bridging loan like a very short mortgage?

Not quite. Because of the extra risks, bridging loans will be more expensive - usually around 1% a month at least.

Only ever take out a bridging loan if you know you won't need the money for long - otherwise the expense will be ridiculously high. 

There are specialist bridging loan providers - and just as with ordinary mortgages, they will need to be convinced you're not overstretching yourself.

Are they a good idea?

Bridging loans are the last resort: Don't take one out unless you really can't avoid it. If you are in a property chain which you don't want to break then they can work - but do get legal advice first.

For example, they could work if there are a few days' delay between completion on your purchase and on your sale. However, they must not be used to prop up a chain which has no certainty of being completed.

If you default on a bridging loan, you may be in trouble on both your properties as the bridging loan lender may take both as security.

What sort of bridging loans are there?

You can get a 'closed' or 'open' bridge. A closed bridge is for homebuyers who have already exchanged on the sale of their existing property.

Only a tiny number of sales fall through after exchange, so lenders are happy to offer closed-bridge financing.

An 'open' bridge is for buyers who have found a home to buy but haven't sold their home and are thus more risky. Lenders will usually put a 12 month limit on bridging loans of this type.

What's the alternative?

If you can't sell but are determined to move, why not let your current home instead? Rental payments should be sufficient to cover the mortgage.

Remember you have to tell your lender if you're letting a property - and also that you'll need to insure the home and get decent tenants.

Receive Mortgage Advice from a Regulated Advisor

Mortgage advice

There is no better time to be seeking suitable mortgage advice from a Regulated mortgage advisor

Submit your details today for an obligation-free chat and a regulated mortgage advisor will call you back to help you find the mortgage that best fits your needs.

We will only provide your details to one regulated advisor.

Your mortgage

 * Help
 * Help
 * Help
 Help
 Help
 *

About you

 *
 *
 *
 *
 *
 *
 *

Questions marked with * are required

Please be aware that the advisor who contacts you will be a third party advisor who has no connection with us. There is no charge to you for using this service. We are paid by charging your assigned advisor a fee for this service. Any advice or assistance given to you by a third party advisor does not represent our advice or assistance and is not checked or endorsed by us. It is your decision whether or not you act on any advice or assistance you are given.

By clicking “Proceed” you confirm that:

  • You accept our Terms of use and
  • You would like to be contacted by a regulated third party advisor to discuss your needs.

Your home may be repossessed if you do not keep up repayments on your mortgage.

Financial Services Net Limited and other trusted 3rd parties would like to keep you advised via e-mail or telephone of products, services and other exciting offers we think may interest you. Please untick this box if you do not consent to us contacting you for further information.

Bookmark and Share
news news rss
Mortgages News

Mortgage approvals up by 33% at mutuals

Leeds pulls lowest-ever 1.99% deal after less than a month

First direct slashes rates by up to 0.5%

       
Mortgage lenders
   

Browse mortgage lender offersMortgage Rates by Lender

  • Browse current mortgage offers from over 90 lenders.

Worried about mortgage repayments?Worried about Mortgage Repayments?

  • Join our petition to Government to bail out burdened individuals, not just banks.

Free mortgage quoteFree Mortgage Quote

Mortgages in Scotland Mortgages in Scotland

Equity releaseEquity Release

  • Unlock equity in your home.

Switching mortgagesSwitching Mortgages

Home reversion plansHome Reversion Plans

Commercial mortgages Commercial Mortgages

  • Commercial property loans
  • Starting a business?

Arrears & CCJs?

  • Remortgages
  • Sub prime mortgages
  • Arrears, CCJs
  • Self certification
  • Debt consolidation

Protect your mortgageProtect Your Mortgage

  • 3 months free mortgage protection cover

Mortgage Newsletter