Bridging loans may prove helpful to borrowers who are stuck up in the middle of a business contract or a big property deal. The reason being the non-availability of cash at that time, the only solution to this is money. Therefore to bridge the gaps that occur in such deals, the borrower can take up a bridging loan.

Bridging loans are typically secured loans that are borrowed for a short duration. Any assets of the borrower can be pledged as security. Usually in property deals, the property that is being bought acts as the security. When the borrower is able to arrange money for repayment, he can free the title of his property from the lender. The term of repayment for bridging loan is 1-12 months. Usually in this time span, the borrower is able to arrange the cash which was not available to him at the time of need as it was locked somewhere else, like in an older property.

Bridging loan is of two types which are open end bridging loan and closed end bridging loan. Open end bridging loan is the one in which the borrower has not yet sold the earlier property and thus is facing a cash problem. The borrower has 12 months time to make the deal and repay the loan. Closed end bridging loan means that the borrower has already made the deal of the earlier property but is yet to receive a cash amount required to buy a new property.

With a bridging loan, it has become very comfortable for the common man to make new deals, be it a property purchase or even a business contact.