All you need to know about the bridging loan market in the UK.

The beginnings.

So, one of the first questions we get asked about bridging loans is how dod it come about and what exactly is bridging finance?

This sort of funding was originally aimed at the property market only. Often home buyers, that already have their own home or property and are looking at mooving to a bigger house, or a home in a new location due to having to relocate a job or through family commitments often got stuck in a property chain.

Imagine fiiding your next dream home, or ideal abode and not being able to purchase it due to your current house not selling just at that time.

Bridging finance was brought in by first by building societies like the Halifax and Nationwide to help those that want to purchase and needed funds only for a short term until their original sold. Basically, the whole of the amount of the second property purchase would be loaned by the society and then once the first porperty sold, it would go directly to the building society to clear the full amount of the bridging loan.

In effect, the loan would bridge the gap between property sales. A bridging loan.

The way the interest worked has deviated very little since this style of fundings inception. You are not long into a long term contract like with a mortgage or a standard personal loan. You are able to clear the full amount at any time after the bridge has been instructed.

You simply pay an interest repayment every month until you pay off the full amount with no early repayment fees.

It was simply a way of building societies and, in later years, banks, retaining customers as mortgage customers.