A bridging loan, sometimes known as a bridge loan, is a short-term loan used to ‘bridge the gap’ between buying and selling property.

Bridging loans can also be utilised as a short-term loan to enable you acquire a property at auction when you don’t have enough money as you have not sold your current property yet.

When you need to borrow money for a short period of time, a bridging loan (or bridge loan) comes in handy. These loans are most commonly used to help fund a new home purchase while you wait for your current property to sell.

Bridging loans come in two forms: closed and open. A closed loan has a fixed repayment date and is typically granted to people who have exchanged contracts but are awaiting the completion of a property sale. Although an open loan does not have a fixed repayment date, you are normally expected to pay it off within a year.

Regardless of the type of loan you take out, the lender will often require proof of a clear repayment scheme, such as leveraging equity from a home or taking out a mortgage.