Using A Bridging Loan To
Cover A Cash Shortfall

A bridging loan is usually taken out to cover a temporary cash shortfall that may arise when buying a property or business. A typical example would be when moving house if you have purchased your second property before seeling the first.

There is an open bridging loan that helps you to buy a home before completing on your sale, or a closed bridging loan that helps if you’ve exchanged contracts on both homes, and you find there’s a delay in moving.

As a bridging loan is more risky for the lender they tend to be more expensive, and should only be used for the short term where you are pretty sure the loan can be cleared up in a matter of months

The amount a lender will usually allow on a bridging Loan will typically be upto 65% of the value of the property less any existing mortgage.

There will be a valuation fee, which again vary from lender to lender so it is worth shopping around for competitive quotes

Some lenders will advance 100% of your borrowing requirements, because they lend on the base value of your property and not the purchase price, effectively letting you borrow 100% . (This would be subject to a valuation)

Using the equity in your existing home, you are able to borrow 100% of the purchase price of the property you are buying. The lender will register a second charge behind your existing mortgage and a first charge on the new property to enable you to get your bridging loan quickly.