Bridging Loans: Pros And Cons

Simply put, bridging loans are short-term loans usually used in purchasing a real estate. Such loans are temporary in the sense that they are used to bridge the gap between a home buyer’s new mortgage and the price of a new home especially in an occasion where the buyer’s home has not been sold yet. The fund accruing from the land is used as down payment to secure the real estate especially when the buyer is short of personal funds.

The Lending Process

The loan process depends on a number of factors. In order for you to secure a bridging finance, you need the contact a reliable lender. Most lenders have their peculiar processes of issuing out the loans. You must be properly eligible to take the loan. Your ability to foot the interest rate and repay the loan is usually considered by the lender before the application form is given out to you. As a borrower, you are expected to have all the necessary qualifications in order to be eligible to apply for the loan. In most cases, the loans are usually for weeks or even for few years.

The fees for the Loan

There are various fees that go with the bridging loan. In most cases, the rates vary according to lenders. The interest rates for the loans are usually on the high side. This is because of the short-term period of the loan and the potential risks involved. Again, the repayment period is also very important. Most borrowers are usually required to pay back the loan in full according to the slated repayment period agreed upon. Generally the fees required include the administration fee, appraisal fee, escrow fee, title policy fee, notary fee, recoding, and some others. The rates for these fees usually vary according to the lender involved.

The Pros

The benefits of the bridging finance are generally seen in real estate purchase. You can secure the loan to purchase a commercial or residential property of your choice. The loan helps you to have the necessary funds on ground even when the house is yet to be sold. With the loan, you as the buyer can also put a home on the market without restrictions.

Another benefit of the bridging loan is that you can always repay it monthly or even after a few months if you can’t pay it back one time. You can always discuss this with your lender.

The Cons

There are some drawbacks with the bridging finance especially with regard to buying a home. The loan is usually very costly more than home equity loans and other normal loans. Secondly, there are certain qualifications needed before a lender can give you the loan. The lender has to qualify the borrower to own two homes. Oftentimes, many borrowers fail to meet this requirement.

Again, the accruing interest rate on the loan is usually very high. This can cause the borrower anxiety especially when things go the other way round.

Securing the Loan

Despite the seemingly high interest rate and other shortcomings, you can always benefit from bridging loans when you locate a good lender. You need to shop around to pick a reliable lender that can give you better offers.


Bridging loans are the ideal for quick purchase of real estate. You can always secure the right short term finance despite the reality of the drawbacks involved in it. Find out more from mayfairbridging.com.