Bridging loans ‘make sense’ in current climate

Posted 2008-02-22

With mortgage approvals plummeting in recent months the editor of one leading finance magazine has said that bridging finance is set to become increasingly popular. Bridging loans function as a short-term solution for prospective homebuyers who have found their dream property, but have yet to find a buyer for their current dwelling. More and more people are finding themselves in exactly that situation as the credit crunch lumbers on - but by taking out a bridging loan they can effectively bridge the financial gap and snap up their ideal property before someone else does. "Bridging finance is ideal for any situation where funds are required quickly and for short periods," Lee Tillcock, editor of Business Moneyfacts, explained. "In an environment where credit is harder to secure, bridging finance can perform an ever more important role." He added that many property investors are also turning to these types of loans as a tightening of credit in the wider financial markets leaves them short of finance for potentially lucrative investments. Experts caution, however, that bridging finance should never be taken out without due consideration as they are amongst the most expensive loans on the market.

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