1.Short-Term Duration:

1. • Bridging loans are typically short-term, lasting anywhere from a few weeks to a maximum of 12-18 months.
   • They are meant to be repaid quickly, either when longer-term financing is secured or when the borrower receives a large sum of money (e.g., from the sale of another property).
2. Higher Interest Rates:
   • Bridging loans usually come with higher interest rates than traditional mortgages or loans, reflecting the short-term nature and the risk involved.
   • Rates can be charged monthly, and it’s important to calculate the total cost over the loan term.
3. Fast Access to Funds:
   • Bridging loans can be arranged quickly, often within days or weeks, making them a popular option for those who need immediate financing.
   • They can help when funds are needed urgently, for example, to secure a property purchase before selling another property or waiting for other financing to come through.
4. Secured Loan:
   • A bridging loan is usually secured against property (either the property being sold, purchased, or both). This means the lender uses the property as collateral.
   • If the borrower cannot repay the loan, the lender can repossess and sell the property to recover the loan amount.
5. Types of Bridging Loans:
   • Closed Bridging Loan: This type is for borrowers who have a clear exit strategy, such as a set date for when the existing property will be sold or when other funds will become available. The loan has a fixed repayment date.
   • Open Bridging Loan: Used by borrowers who don’t yet have a clear exit strategy (e.g., they haven’t secured a buyer for their existing property). These loans typically don’t have a fixed repayment date, but the borrower must repay within a set time frame, usually up to 12 months.
6. Loan-to-Value (LTV) Ratio:
   • Bridging loans typically offer an LTV ratio of 65% to 80% of the property value, meaning borrowers need to have substantial equity or assets to qualify.
   • Lenders may offer more or less depending on the borrower’s financial situation and the type of property involved.

• Buying a new property before selling an old one: If you find a new home you want to buy before you’ve sold your current home, a bridging loan can cover the purchase of the new property.
• Property development or renovation: Bridging loans are commonly used by developers or investors who need funds to renovate or develop a property before selling or refinancing it.
• Auction purchases: When buying a property at auction, you may need quick access to funds, as auction purchases often need to be completed within 28 days.
• Short-term cash flow needs: Businesses may use bridging loans to cover cash flow gaps or to quickly finance an investment opportunity.

• Quick approval and funding: Bridging loans are processed faster than traditional mortgages or loans, allowing borrowers to act quickly on property deals.
• Flexible repayment: Many lenders allow interest to be “rolled up,” meaning that instead of making monthly interest payments, borrowers repay both the loan and the accumulated interest at the end of the loan term.

• Higher costs: The interest rates on bridging loans are significantly higher than on regular mortgages, and fees can also be high (e.g., arrangement fees, exit fees, legal fees).
• Risk of repossession: If you are unable to repay the loan within the agreed time frame, the lender may repossess the property used as collateral.