Bridge loans are typically secured against the borrower’s existing property and are usually repaid within 6 to 12 months. 

However, if the borrower is unable to repay the loan in full, the lender may charge higher interest rates to offset the risk of default.

A bridge loan differs from a traditional mortgage in that it is designed to be a temporary financing solution rather than a long-term investment. 

This means that lenders who offer bridging finance tend to charge higher interest rates than those offering traditional mortgages.

Ultimately, bridge loans can be an effective way for borrowers to purchase a new property without having to wait for the sale of their existing home, but it’s important to carefully consider the terms and conditions before proceeding with this type of loan.

What can you use a Bridge Loan for?

One of the most common reasons to obtain a bridge loan is to buy a property while waiting for funds from the sale of another property. 

For instance, if you want to buy a new property but have not yet sold your current one, a bridging loan can bridge the gap between the sale and purchase.

Additionally, a bridge loan can be used to fund renovations on an existing property to increase the value before applying for a long-term mortgage. 

This type of loan can also be useful for investors who want to purchase a property that needs significant repairs or upgrades before applying for a long-term mortgage. 

A bridge loan can provide the necessary funds for temporary ownership of a property while waiting for long-term financing or selling the property. 

GPS Financial offers a range of bridging finance depending on the use case, these can include:

• Commercial Bridging Loans 
• Bridging Loan Property Purchase
• Bridging Loan for Property Development 
• Regulated Bridging Loan
• Auction Bridging Finance 
• Bridging for Refurbishment
• 100% Loan To Value (LTV) Bridging Loans
• 80% Loan to Value (LTV) Bridging Loans
• 75% Loan to Value (LTV) Bridging Loans
• Bridging Loans for Unmortgageable Properties
  
  

How much can you borrow with a Bridge Loan?

The amount that can be borrowed using a bridge loan will depend on the value of the property that is being used as security. 

Typically, lenders will offer bridge loans up to 70% – 85% of the value of the property that is being secured against the loan. 

This means that the borrower will need to have some equity in the property to be able to access bridging finance. 

In some cases, lenders may consider offering a higher loan-to-value ratio, but this will depend on the individual circumstances of the borrower and the property in question. 

As bridge loans are intended to be a short-term solution, they typically have higher interest rates than traditional loans. Therefore, it is important for borrowers to have a clear plan for repaying the loan as soon as possible.