Bridging Finance

Bridging finance, commonly referred to as a bridging loan, is a short-term financial instrument designed to provide immediate funding in circumstances where there is a temporary shortfall in liquidity. It is most frequently utilised in the property sector, enabling individuals or businesses to proceed with the purchase of real estate assets while awaiting the release of capital from an existing transaction, such as the sale of another property.

The primary purpose of bridging finance is to “bridge the gap” between the need to make a financial commitment and the availability of long-term funding or incoming proceeds. This type of financing is particularly advantageous in time-sensitive situations, where delays in capital inflow could otherwise jeopardise a transaction.

One of the most common applications of bridging finance arises in property chains—complex sequences of interdependent transactions where the failure or delay of one element can disrupt the entire chain. In such cases, a bridging loan can serve as a financial buffer, allowing the borrower to continue with their purchase without waiting for the successful completion of the sale of their existing property. This flexibility can be crucial in highly competitive real estate markets where opportunities must be acted upon swiftly.