Bridging loans in Ireland provide short-term mortgage finance solutions for property buyers who need quick access to funds. Whether you’re purchasing a new home before selling your existing one, securing an auction property, or renovating a buy-to-let investment, bridging finance can help bridge the financial gap.
Key Features of Bridging Finance
Bridging finance is a fast and flexible funding option designed to support property buyers that require immediate capital. It can be used for various purposes, from securing a new property to funding renovations or meeting tight deadlines. Here are some key features:
- Trading Up or Down – Secure a new property before selling your current one.
- Auction Finance – Quick funding to meet auction deadlines.
- Buy-to-Let Renovation – Finance for refurbishing investment properties.
- Up to 70% LTV – Loan-to-value ratio for eligible properties.
- 1% Variable Rate Per Calendar Month – Equivalent to 12% per annum (APRC From 15.15%). (rates correct at 28/02/2025)
What Is a Bridging Loan?
A bridging loan is a short-term loan designed to provide temporary financing until a more permanent solution, such as a traditional mortgage or property sale, is secured. This type of loan is typically used by property buyers who need immediate funds to complete a purchase.
How Does Bridging Finance Work?
Bridging finance works by giving borrowers quick access to funds, usually secured against their existing property or the new property they are purchasing. The loan is repaid when the borrower secures long-term financing or sells the property. Unlike standard mortgages, bridging loans have higher interest rates and are structured for short-term use, often lasting between a few months and a year.
Types of Bridging Finance Solutions
Bridging finance solutions come in various forms, tailored to meet different financial needs and circumstances. Whether you require short-term funding to secure a new property before selling an existing one or need capital for a business investment, bridging loans offer flexible options. The two primary types of bridging loans —closed and open— vary in terms of repayment certainty and associated risks.
Closed Bridging Loans
A closed bridging loan is for borrowers who have a definite exit strategy, such as an agreed-upon sale date for their existing property. Lenders are more comfortable offering lower interest rates for this type of loan since repayment is assured.
Open Bridging Loans
An open bridging loan is used when borrowers do not have a set date for repaying the loan. These loans are riskier for lenders and typically have higher interest rates.
Why Property Buyers Use Bridging Finance in Ireland
Many buyers turn to bridging finance in Ireland for various reasons, including:
- Buying a new home before selling an existing one – avoiding property chain delays.
- Auction purchases – requiring fast completion within strict deadlines.
- Funding property renovations – financing refurbishments before refinancing with a long-term mortgage.
- Buy-to-let investments – upgrading properties for rental income.
How Much Is Bridging Finance? Costs & Interest Rates
Bridging finance costs can vary depending on factors such as the loan amount, term length, property type, and the borrower’s financial profile. While interest rates are a key consideration, borrowers should also factor in additional fees that can impact the overall cost. Understanding these expenses upfront can help in assessing affordability and comparing different lenders effectively.
Interest Rates
Unlike traditional mortgages, bridging loan interest rates are typically charged monthly, not annually. Rates start from 1% per calendar month, equivalent to 12% per annum (APRC From 15.15%). (rates correct at 28/02/2025)
Bridging Loan Fees
In addition to interest, bridging loans come with additional costs and fees, including:
- Lender fees – a percentage of the loan amount.
- Legal fees – for processing the transaction.
- Valuation costs – assessing the property’s value.
How to Apply for a Bridging Loan in Ireland: Step-by-Step Guide
In Ireland, obtaining a bridging loan involves a straightforward process, but careful planning is essential to ensure you meet lender requirements and secure the best terms. Below is a step-by-step guide to help you navigate the bridging loan application process efficiently.
1. Assess Financial Needs and Loan Amount
Determine how much funding is required and ensure you have a viable repayment plan.
2. Choose a Bridging Loan Broker for Expert Guidance
A bridging finance broker can help you find the best deals and navigate lender requirements.
3. Submit Documents
Lenders require documents such as:
- Proof of income
- Property details
- An exit strategy (how you plan to repay the short term loan)
4. Receive Approval and Funding
Once approved, funds can be transferred within days, making it a fast financing option.
Choosing the Right Bridging Finance Solutions
When selecting a bridging finance solution, it’s essential to assess your financial situation, the loan’s purpose, and the repayment strategy.
Compare Bridging Loans
Compare interest rates, fees, and loan terms to find the best fit for your needs.
Work with a Bridging Loan Broker to Find the Best Deal
A bridging loan broker helps negotiate better terms and connects you with suitable lenders.
How Quickly Can You Get a Bridging Loan?
Bridging loans can be processed within 5 to 14 days, depending on the lender and documentation provided.
Risks & Considerations Before Taking a Mortgage Bridge Loan
Before committing to a mortgage bridge loan, it’s crucial to evaluate your financial position and exit strategy. Understanding the terms, repayment obligations, and market conditions can help you avoid financial strain and unexpected challenges.
High Interest Rates
Due to their short-term nature, bridging finance rates are higher than traditional mortgages.
Failing to Secure a Long-Term Mortgage
If you fail to refinance or sell your property within the agreed period, you may struggle to repay the loan.
Alternatives to a Mortgage Bridge Loan
If bridging finance isn’t right for you, consider:
- Remortgaging – refinancing your existing home loan might be an option (Best way to remortgage).
- Personal loans – suitable for smaller funding gaps.
- Equity release – accessing funds from your home’s sale value.
How MortgageLine Can Help with Bridging Loans
At MortgageLine, we provide expert guidance on securing bridging finance solutions in Ireland. Our team helps you:
- Find the best bridging loan rates.
- Navigate lender requirements and application processes.
- Secure fast funding with minimal hassle.
- Ensure you have a clear exit strategy to avoid financial strain.
FAQs
Is a Bridging Loan a Good Idea?
A bridging loan can be beneficial if you need fast funding and have a clear repayment plan, but due to high interest rates, it’s essential to assess affordability.
What Is an Example of a Bridging Loan?
An example would be using a bridge loan to buy a house before selling your existing home, allowing you to avoid delays and complete the purchase.
How Long Is a Bridge Loan?
Most bridging loans last between 3 to 12 months, depending on the lender and repayment strategy.
Get Expert Advice on Bridging Loans Today
If you’re considering bridging finance in Ireland, MortgageLine can help you find the best solution. Contact us today for a free consultation to explore your options!
