Bridging Loans: A Broker's Guide

Have a client with a great opportunity but not the funds? A bridging loan could help keep the deal moving.

From keeping a house purchase on track if the chain breaks down, to funding renovations on an unmortgageable auction property, you could be missing a trick if you’re not looking at bridging finance.

What is bridging finance?

The clue is in the name. Bridging loans are short-term finance to bridge the gap between money going out and money coming in. So, they are an option for clients wanting to buy their next property before another has sold, or to pay for renovations on a 'fixer-upper' they are planning to sell on.

Regulated bridging loans are secured on residential property and have a maximum term of 12 months. Unregulated bridging loans, which can be secured on residential investment property, semi-commercial, commercial property, or land, also usually have a 12 month term but longer durations are available.

Bridging finance could be the answer if:

The client won’t be keeping the property long, or they’ll move to a longer-term loan once their short-term spend has driven an increase in value.
When they need money fast (for example, to secure an auction property).
If their property is deemed uninhabitable, but the loan will pay for renovations that mean it can be mortgaged in the future.