Bridging loans are short-term loans. They are usually obtained in urgent or emergency situations where it is necessary to get case quickly however; they are primarily used for real estate purchases. These are secured loans so there must be some asset, which has be professionally assessed and valued that can be used as security for the loans.



Security on the loans is usually property it can be residential either properties or developments, the same for commercial, either property or developments. You can also use a mixture of commercial and residential property as well as land, offices, and retail locations. As you can see in order to use bridging loans, you must already hold property to be used as security on the bridging loan.

The total amount you are able to borrow will typically be somewhere from 30,000 to 10,000,000. There is a limit to the amount that you can borrow; it is usually a percentage of the market value of the property which you will be using to secure your loan. This is typically limited to about 85% for residential property, 70% for land only, or 65% for commercial property. If other securities are put up as additional collateral, the percentage rate may differ.

There are several reasons for going for a bridging loan. These reasons include buying a property being auctioned, a new property even while the sale of current property is concluded, buying land, equity release for debt consolidation and other similar purposes or financing for business, renovations, or investments. You can also make commercial property purchases through the use of bridging loans.

There is a cost attached to bridging loans so be prepared to pay a little extra for this type of short term loan. The cost varies it is usually dependent on the type of property and your credit standing. If you have had bad credit you may end up paying more but the cost is usually set to between 1% and 2.0%. You will also have to pay an arrangement fee, as well as a valuation fee is usually required on bridging loans. The amounts of these fees are subject to change based on the value of the property.

Bridging loans can either be obtained from high street or specialist lenders. While the rates offered by high street lenders may be higher than those available from specialist lenders, you might want to look into both options to see which best suits your needs.

Bridging loans are short term loans with a typical duration of about six months. That means you will have to repay the loan in full within that time frame. There are some options available that will allow you to have the loan period run for as long as necessary.

In essence, bridging loans offer short-term financing for urgent situations, like buying property or to release equity on existing property quickly. You must own property to use as security if you plan on applying for a bridging loan.