A short guide to bridging loans in the UK

For the many people who are confused about bridging loans in the UK, this a short guide to the subject.  

A bridging loan is often taken out to solve a cash flow problem that is usually temporary.  This shortfall may arise when buying a business or a property.  Many UK loans lenders will offer to supply a bridging loan, which can basically be described as a short term mortgage.  A bridging loan is like a mortgage in the sense that it is secured against a property or some such other asset.   

The most common reason in the UK to apply for a bridging loan is to cover the shortfall between buying one property when you are selling another.  With the housing market in the UK being so unreliable, there is often the case of a buyer pulling out at the last minute.  This can leave the person who is selling with a shortfall that the bridging loan will cover until another buyer has been found. 

The loan is called a bridging loan in the UK for this very reason; that it ‘bridges’ the gap between the sale of the existing property and the purchase of the new one.   

If you are considering taking out a bridging loan then it is important to do thorough research on the UK loans companies you are thinking of applying to.  Many different loans officers will offer different packages with a bridging loan, so don’t be tempted by the first loans company that advertises its services to you.