A bridging loan is a short term facility, the typical term of this type of loan is for a period of 2 weeks to 1 year. A bridging loan is used to ‘bridge’ the gap between a debt or sale coming which are secured with a first legal charge over the property to be acquired within a defined timescale agreed at the outset.
Interest is serviced monthly or depending of the loan to value and term could be rolled up to expiry. Bridging loans are really useful in the property industry, property transactions will normally require a quick turnaround time, which most banks will not be able to fulfil all their requirements in such a short space of time.
Some fantastic benefits to a bridging loan are; it’s a great source of short term cash to a business secure that purchase or development site, its quick to be agreed and its quick to draw down.