What exactly is a bridging loan?
A bridging mortgageis a short-term loan that is intended to bridge the gap between selling your present home and buying a new one.
Some people prefer to sell their current home first, then utilize the proceeds to buy their new home. There are times, though, when you wish to buy first and then sell.
Here are some cases in which a bridging loan might be useful:
- You're in a disrupted property chain, and you don't want to lose your ideal home.
- You're buying a home at auction and need to raise money soon.
- When purchasing an unmortgageable house. Your objective is to make it habitable or rentable so you can get a standard mortgage.
- Bridging loans are secured loans, which means you must put up collateral, usually a property. Bridging loans are commonly referred to as "loans of last resort" because they carry the danger of losing your asset.
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