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Bridging loans & finance explained

Bridging finance is a type of mortgage intended for short term borrowing.

It can usually be set up as either a first or second charge loan over a residential or commercial property, a business or other types of assets.

It is typically much faster to arrange than a normal mortgage and hence it is often used in the purchase of property at auction.

Open bridging finance is used where there is no known date for the finance to be redeemed

This type of bridging loan is usually more expensive and often will come with the option to convert to a standard mortgage product at a later date.

Although the interest rate may not be in line with high street banks.

Closed bridging finance is used where a known end date is available.

This may be the completion date of another property sale or purchase for example, or perhaps the date that work will be completed on a property where a mortgage lender has taken a retention of funds.

Bridging finance is also considerably more flexible than a standard mortgage product both in terms of the type of properties that may be suitable as security and also the income evidence required to arrange it.

Although self certification has disappeared in the residential mortgage market it is still available on bridging finance.

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