What is a Bridging Loan?
A bridging loan, also known as a ‘fast loan’, is a sum lent on a short-term basis to quickly fund a property purchase. This makes them perfect for securing a new home before selling your current one, for example when buying a property at auction.
The clue’s in the name: bridging loans act as a financial bridge between projects. You’d typically take one out when you expect to pay it off over a short period of time, as the interest rates on bridging loans tend to be higher than many other types of loan.
How to Get a Bridging Loan
In principle, there are 2 kinds of bridging loan: closed loans, which have a fixed repayment date; and open loans which have no fixed date but are still required to be paid off as quickly as possible. We can advise you on the best bridging loan to take out to meet your needs.
Whichever type of bridging loan you go with, the lender will want to see a clear repayment plan. As you might expect, your repayment strategy will need to be more detailed with a closed loan, as there is a defined structure for your repayments to fit into.
An open loan affords more flexibility but the lender will still want to know where you will source the repayments from. Hawke can offer you expert advice on formulating a strategy to make your loan repayments work for you.