Bridging

Bridging finance is a short-term facility that covers a gap between two events — most commonly buying a new property or business asset before an existing one has sold, or needing funds ahead of a longer-term facility settling. It differs from a caveat loan mainly in structure and term: bridging is typically secured by a registered mortgage and can run somewhat longer, from a few months to around a year, whereas a caveat loan is faster to arrange but generally shorter-dated. The credibility of the bridge — a signed contract of sale on the asset being sold, or a documented refinance already in progress — is what lenders scrutinise most closely, since bridging finance is only ever a temporary solution pending that specific, defined event. Borrowers using bridging finance should have a realistic view of how long the bridge genuinely needs to be, since an optimistic timeline that slips can leave a facility running past its intended term at a materially higher cost.

Related

Bridging loans · Exit strategy · Caveat