What is Bridging Finance?
Bridging finance is a short-term loan that bridges the gap between buying your new home and selling your existing one. It allows you to complete the purchase of a new property before the sale of your current home has gone through.
It is important to clarify the position in relation to the availability of bridging finance at an early stage in the mortgage process. Your solicitor has an important role to play in ensuring the timing of the sale of your own house and the purchase of your new house are to your advantage — or certainly not to your disadvantage.
How Does It Work?
When you find your new home but haven't yet sold your existing property, a bridging loan covers the shortfall. Once your current home sells, you use the proceeds to repay the bridging loan and transition fully onto your new mortgage.
There are two main types:
- Closed bridging loan — You have a confirmed sale date for your existing property. Lower risk, and lenders are more comfortable offering these.
- Open bridging loan — No confirmed sale date yet. Higher risk, higher cost, and harder to obtain.
Costs Involved
Bridging finance is more expensive than a standard mortgage. Expect:
- Higher interest rates — typically 1–2% per month
- Arrangement fees — usually 1–2% of the loan amount
- Legal fees — your solicitor will need to handle two sets of conveyancing simultaneously
- Valuation fees — lenders will require valuations on both properties
Is Bridging Finance Available in Ireland?
Bridging finance is less commonly available in Ireland than in the UK. Most mainstream Irish lenders do not offer bridging loans. Specialist lenders and private finance providers are the most likely source.
Before assuming you need bridging finance, explore alternatives:
- Negotiating a long closing date on your new purchase to give your sale time to complete
- Renting temporarily between selling and buying
- Chain management — working with your estate agent and solicitor to synchronise both transactions
The Role of Your Solicitor
Your solicitor is central to managing timing when you are simultaneously selling and buying. They can:
- Coordinate closing dates with both sets of solicitors
- Advise on contract conditions to protect your position
- Manage the flow of funds on the day of closing
Good communication between all parties — your solicitor, the buyer's solicitor, your lender, and the vendor's solicitor — is essential to a smooth transaction.
When to Consider Bridging Finance
Bridging finance may make sense if:
- You have found your ideal home and cannot risk losing it
- Your existing property is sale agreed but not yet closed
- The timing gap is short and you can service the additional cost
Always get independent financial advice before committing to bridging finance. The costs can add up quickly if your sale is delayed.