A bridging loan is a short term finance that is used to bridge the gap between a buy and a sell transaction. It pays for your new property before you sell your old one. Once you sell your old property, the proceeds can be used to repay the bridging loan. It can also be used to finance a business. If you have applied for a business loan, you can take out a bridging loan to run your business until you receive the business loan.

A bridging loan is a secured loan which is secured against a commercial or a residential property. As we have already discussed, a bridging loan is a short term loan that is used to fulfill short term personal or business needs. The loan period of bridging loans ranges form a few days to a few weeks. The maximum loan period of a bridging loan is two years. The good thing about bridging loans is that they are easily available and can be arranged within a short period of time.

The rate of interest on bridging loan is very high. You should get it only for the purpose of bridging the gap between two transactions. Once you get it, you should repay it within a short period of time because of high interest rate. If you take out a bridging loan, make sure that you repay it as per the loan terms, otherwise the property that you offer as a security may be repossessed by the lender. The rate of interest depends upon the credit rating of the borrower and the value of collateral.

If you are taking out a bridging loan to purchase a new property, then make sure that your old property gets sold quickly otherwise your interest burden would be very high. You must try and sell your old property as soon as you get a bridging loan since the sale proceeds of the old property will be used to repay the new property. Bridging loans can also be taken out by borrowers who have a bad credit history. The rate of interest on bad credit bridging loans is even higher. You must consider every aspect of a bridging loan before applying for it.