An interim financing for an individual until permanent financing or the next stage of financing is obtained. Money from the new financing is generally used to service the bridge loan.
It is a great option if you need to move quickly to buy a property. Like any other home loan though, it is not a debt to be taken on lightly and it pays to speak to a professional mortgage broker so they can provide the right recommendations to you.
Bridging loans are usually "secured" for the lender, as it is usually against the value of a property: either a property already owned, or the one being purchased. Or sometimes it is short term financing option for an individual to have immediate cash for its business while waiting for the business loan to be disbursed. Basically, the individual will need to authorize the business lender to settle the bridging loan.
Alternatives to bridging loans
Before you take out a bridging loan, investigate how else you could secure finance and make a balanced decision based on your options.
You might be able to make use of an overdraft, asset financing - a short-term loan that uses your possessions as collateral - or you could seek private equity.
There are also drawbacks to asset financing and private equity, so be cautious and get advice based on your financial situation before committing to a loan or any funding from a third party.
Apply here or contact our professionals at BizBridge for advice.