Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.

A bridging loan serves as a short-term financial solution, ‘bridging’ the gap in funds when buying a new property before selling an existing one. This loan is especially useful for swift financial resolutions, such as securing a new property while awaiting sale proceeds.

In various scenarios, like quick purchases at auctions or snapping up a dream home without sale delays, a bridging loan proves beneficial. It also aids property developers in starting new projects or continuing existing ones, even when funds are limited.

These loans are usually interest-only, requiring you to pay just the interest during the loan term. The principal amount is due at term end, assisting in cash flow management during the transition period.

However, bridging loans often have higher interest rates than traditional mortgages, reflecting their increased risk and short duration. They may also include arrangement fees and other costs.

Given their complexity and expense, bridging loans demand careful consideration. Seeking professional financial advice is recommended. Fully understanding the terms, repayment obligations, and potential risks is key to deciding if a bridging loan suits your property transition needs.