A bridging loan is a short-term loan that is used to bridge the gap between two financial transactions. For example, if you are selling your home and need to buy a new one before the sale of your old home goes through, you could take out a bridging loan to cover the cost of the down payment on your new home.
There are a few requirements for taking out a bridging loan:
-You must have equity in your current property: This is because the lender will use your property as collateral for the loan.
-You must be able to prove that you have the ability to repay the loan: The lender will want to see proof of income and assets, as well as a detailed plan for how you will repay the loan.
-The purpose of the loan must be clearly defined: The lender will want to know exactly why you are taking out the loan and what it will be used for.
-You must have a solid exit strategy: The lender will want to know how you plan on repaying the loan, which typically involves refinancing or selling your property.