If you’re planning to buy a home and sell the present home at the same time, you may land yourself into a situation where you need to complete your purchase and the funds from your buyer isn’t present. This will leave you with no other option then waiting for the proceedings of your home’s sale to come through. This is where you can take help of Bridging loan.

Bridging loan is a little like a mortgage, designed only for a short term with high interest rates, until you’ve sold your existing property. It offers a considerable amount, from £25000 to cover a shortfall to up to a few million pounds to fund the whole purchase. The loan amount can be borrowed from the period of a week to up to six months.

Bridging loan is easily accessible and designed to the convenience of the borrower. However, some providers can take advantage of the urgency factor of the borrower. The borrower should thereby look for the punitive expensive rates on the loan. Usually the interest rate of a Bridging loan is anywhere around 2.5 per cent a month. In addition to the interest rate, some loan providers also charge administration fee or management fee that may be 1.5 per cent of the loan.

As an applicant of Bridging loan, you need to keep few things in mind. Like mortgages, the amount borrowed is secured on your home. As a result you need to be very careful with the repayments. If you fail to sell your existing home, you may have to also sell your new home to pay-off your Bridging loan. To add to you despair, you could as well spend from your own pocket for the legal costs from buying and selling your houses, plus the interest you'll have to pay on the loan before you had to pay it back.