A bridging loan is a very short term loan. The higher penalty interest rates that apply to this sort of loan is not reflective of risk but the profit objective because the loan may only last a month or two and not 25 years (if it was a home loan). The lender only has a limited period from which to earn a profit, so the set up costs and interest rates are much higher.
During the bridging period the borrower does not have to make any loan repayments because the debt will be fully extinguished at the settlement of the original property.
Non-Conforming or Credit Impaired Loans are specialised loans that usually attract a premium interest rate because the borrower has incurred credit defaults or judgements. The number and amount of credit default(s) will influence the interest rate penalty and the amount lent against the value of the security.
back to Loan Types