What Is A Bridging Loan?

This kind of loan mainly occurs when there is property or land transactions are involved. It is a short term loan associated with higher rate of interest.

A person would go ahead with this is kind of loan when he has to bridge his financial issues while dealing with any property. As the name suggests Bridging Loan, it actually means when there is any sale of house or a property and another need to be purchased. Then it is best when both the deals are concluded together. But then if the sale does not work out and the purchase is already made, so an additional financing is needed. That is when Bridging of Loan comes into the picture.
It is a short term loan provided till the sale of the first property or land.

There are two kinds of bridging loans: - Closed and Open Bridge. In Closed Bridge, it is only available for homebuyers who have already purchased a new property but are unable to dispose off the previous.

In open Bridge:- It is for those who have found their dream houses or properties that they have been about since years, but may not have put their existing house for sale as yet. In such a case the bank does a lot of scrutiny. They might ask for lot of equity on the existing property.

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