Definition
A short-term secured loan used to bridge a gap between a purchase and a longer-term funding solution or sale. Bridging loans are typically available for 1 to 18 months with interest rates quoted monthly rather than annually. They are commonly used for auction purchases, chain breaks, and pre-planning site acquisitions where speed of completion is critical.
See also
Closely related terms.
Day One Advance
The initial tranche of a development or bridging loan released on the first day of the facility, typically used to fund the site acquisition.
Rolled Up Interest
An interest arrangement where monthly interest charges are added to the outstanding loan balance rather than being paid by the borrower each month.
Exit Fee
A fee charged by the lender when a loan is repaid, typically expressed as a percentage of the gross loan amount or sometimes as a percentage of the GDV.
LTV (Loan to Value)
A lending ratio that expresses the loan amount as a percentage of the current market value of the property being used as security.
Further reading
Guides that touch this term.
Guide
Using a Bridging Loan to Buy at Auction: A Step-by-Step Guide
Buying at auction requires completing within 28 days. Bridging loans are the go-to funding solution. This guide covers how to get pre-approved, what it costs, and how to plan your exit.
4 min read readReadGuide
Development Finance vs Bridging Loans: Which Do You Need?
Two of the most common short-term property finance products, but they serve very different purposes. We break down the rates, terms, and scenarios where each makes sense.
8 min read readReadGuide
Hidden Arrangement Fees in Development Finance: What Lenders Don't Tell You
Arrangement fees in development finance are rarely as straightforward as a single percentage. This guide exposes the hidden layers of fees that lenders charge and shows you how to negotiate effectively.
9 min read readRead
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