Bridge Loan

A bridge loan (or bridging loan) is a short term loan designed to cover the costs of temporarily owning two properties (the one you're buying and the one you're selling) in order to help a property chain move. For example, you can take out a bridge loan if you want to complete on the property you are buying, but are still waiting to sell your current property, because if you wait too long, the property you want to buy may be sold to someone else. A bridging loan can allow your purchase to go ahead, before your sale has taken place, and will keep the whole chain of property deals moving forward.

Benefits

A bridging loan can help to keep a property deal moving, to ensure you get the property you want.

Risks

Interest rates are usually higher, due to a bridging loan being short term in nature.

For a period of time you will be paying for two loans so this may put stress on your monthly budget. If your sale becomes delayed, or falls through, this dual payment may last many months.

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