Bridging Loans Defined

2007-03-08 10:33:40

( Financial )



People usually assume bridging loans - also known as bridge loans – to cater to immediate cash needs, which are usually intended for renovation purposes or acquisition of real property or business. Even if you have a bad credit, bridging loans are easy to secure for as long as you have a property or an asset you can use as collateral. However, you must be ready to pay more for such loans. Since bridge loans present substantial risk to loan providers, the interest rate on such debts are higher compared to conventional mortgages.

Short-term financing

Many secure bridging loans as temporary source of financing until a more permanent loan is obtained. The term of bridge debts usually lasts from a week up to one year. However, the maximum term of such loans is two years.

Secured loan

Bridging loans are secured loans. Thus, you need collateral to obtain this type of financing. A lender of bridging loan would accept residential, commercial, semi-commercial, auction or buy-to-let properties as security for the loan. You can also use retail shops, sites with planning approval, development sites, business equipment, inventory or heavy machinery as guarantee for your bridge loan.

Based on property value

The value of your property or collateral will dictate the amount of bridge loan you can get. You must remember that lenders do not base your loan on the purchase price of your property, but on its current valuation. Since loan lenders dictate how much you can get, it would be wise to shop around and compare loans provided by different creditors.

Speedy finance

If all necessary documents are available and complete, you can get bridging loans within 24 hours after submitting an application. When faced with cash flow problems, many choose bridge debts over refinancing loans and other mortgages because bridging loans can be obtained quickly.


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