12 Mar 2024


A bridging loan is a short-term loan that can be used in circumstances where you need to borrow funds for a short interval of time. This arrangement works until a permanent form of financial solution becomes available.

Bridging finance is used when you need funds to buy something new. Generally, you have to wait for the funds after you sell some assets. For example, in the real estate industry, a bridging loan is often used by people who want to buy a new property as they wait for the old property to get sold.

A bridging loan provider requires you to keep an asset of high value as a security. Applicants can go for a bridging loan for commercial or personal use. This includes:

  • Buying a home
  • Buying industrial equipment
  • Buying property at auction
  • Property development
  • Leveraging new business opportunities

Here are some top pointers to secure a favorable bridging loan offer.

1. What is the purpose of the Bridging loan?

You need to be very clear about the fact as to why are you availing of a bridging loan. They can be used for property renovation and time-sensitive property transactions. You can also use them to pay off debts and this way reduce short-term business cash flow problems.

Bridging loans are used by investors and property developers for residential property transactions. For example, if a property is bought at an auction, you need to complete the transaction within 28 days. A traditional loan would require much more time so opting for bridging finance is a better option.

2. Be decisive about taking a regulated or unregulated bridging loan

A bridging loan can be a regulated bridging loan or an unregulated one. If you know the essential difference, it will speed up the process as not every lender will provide both.

A regulated bridging loan is often designed to help individuals move into a new home or refurbish their existing property. They are taken against a property owned in either a personal name or via a trust. The property is typically occupied or intended to be occupied by the owner or an immediate family member.

On the other hand, Unregulated bridging loans are designed to raise money for refurbishment or development. They can also be used for any business investment purposes.

3. Have Clarity on how will you repay the loan

You must have clarity about how you will repay the bridging loan to a bridging loan company. Will you opt for refinancing, sale of property, etc? A good or indeed a bad exit plan can make or break your chances of securing a bridging loan. Being ready with a robust exit plan will speed up the process of taking a bridging loan.

4. Choose the right lender

Some lenders who advertise very low interest rates can put you in a tight spot with hidden fees and criteria that make those lowest rates impossible to get. You need to be clear about how quickly you need the loan to complete although when it comes to a bridging loan, it’s often quick. Look for lenders that are always quick to respond and provide a personal service.

5. Complete documentation to get the loan processed quickly

A bridging loan is known for the speed of disbursal. Complete all the required information to get the deal processed fast. This is vital to get a bridging loan done. Make sure that you complete the following formalities:

  1. The loan amount required
  2. The detailed loan process
  3. Whether to opt for the regulated or unregulated bridging loan
  4. Identification Proof (at least two copies)
  5. Proof of address
  6. Proof of earnings/assets
  7. Exit plan
  8. Credit history

Final Thoughts

Keeping these key factors in mind before taking out a bridging loan will certainly help you in making a prudent decision. If you think you can get hold of the required funds through a bridging loan and have the required capacity to repay it in a short time, then a bridging loan is the most reliable, efficient, and flexible option.

Check also: Tips for repaying bridging loan