Bridging Finance Ireland – How It Works

Buying property doesn’t always go perfectly to plan. 

Sometimes, you may find the home you want before your current property has sold. Other times, you may need to complete a purchase quickly, such as at auction, before a standard mortgage can be fully arranged.

This is where bridging finance can become useful.

This guide explains bridging finance in Ireland, including what it is, how a bridging loan works, when it may be used, the risks involved, and why it is important to have a clear repayment plan before applying.

What Is Bridging Finance?

Bridging finance is a short-term loan used to “bridge” the gap between the amount of money a person has available and the money needed immediately for a mortgage.

Simply put:

A bridging loan gives you short-term money now, usually until another event happens later to end the loan.

That later event is normally called the “exit.”

The exit could be:

• Selling your current home
• Refinancing onto a normal mortgage
• Receiving funds from another property transaction

Unlike a standard mortgage, bridging finance is not designed to be repaid slowly over 20 or 30 years. It is usually designed to be repaid within months (12-18), not decades. Bridging Finance is a temporary solution for property purchasing until another solution is available (such as a standard mortgage).

How Does A Bridging Loan Work?

A bridging loan in Ireland usually means that the mortgage is secured against property.

This means the lender uses the property as security for the loan. If the borrower does not repay the money as agreed, the lender may have the right to take action against the property.

In simple terms, the process usually works like this:

1. You need money for a short period of time
2. A lender agrees to lend against a property
3. You use the money to complete a purchase or cover a timing gap
4. You repay the loan when your “exit” happens (an influx of funds)

For example:

You own a home worth €500,000.

You want to buy a new home for €400,000, but your current home has not sold yet.

A bridge loan may allow you to buy the new home first, then repay the loan once your old home sells.

When Is Bridging Finance Used?

Bridging finance is usually used when timing is the main problem.

The main reasons include:

• Buying a new home before selling your current home
• Purchasing a property at auction
• Immediate renovations are needed

For home movers, bridging finance can help when they have enough value in their current home but do not yet have the cash available because the sale has not completed.

For investors, bridging finance can be useful when a property needs to be bought quickly or improved before a normal mortgage becomes possible. For instance, the water pipes must be fixed immediately before the normal mortgage is possible.

Who Offers Bridging Finance In Ireland?

Bridging finance in Ireland may be offered by:

• Banks
• Specialist mortgage lenders
• Broker-led lending panels

Not every lender offers bridging finance, and not every product is suitable for every borrower.

Some options are designed for home movers. Others are mainly aimed at investors, companies, landlords, or developers.

For example, Bank of Ireland has a trade-down style product for certain home movers, while ICS Mortgages offers housing bridging loans. 

This is where private lenders in Ireland may become relevant.

Private or specialist lenders may be considered when a borrower needs:

• Faster approval
• A more flexible structure
• Funding for a property that needs work
• Finance through a company or investment vehicle
• A non-standard property finance solution

However, private lending can be more expensive, with a higher interest, and should be reviewed carefully before committing.

How Much Can You Borrow?

The amount available depends on the lender, the property, the loan purpose, and the exit plan.

Loan-to-value, or LTV, is especially important.

LTV means the loan amount compared with the property value.

For example:

• Property value: €500,000
• Loan amount: €300,000
• LTV: 60%

Bank of Ireland states that its Trade Down Equity Release option has a maximum loan of 60% of the current home’s value. Usually this is around the standard LTV, with some ranging within 20% of that (40% – 80%).

Bridging Finance Timeline

The process often looks like this:

1. Make an enquiry
   You explain how much you need, why you need it, and how the loan will be repaid. Using a mortgage broker would help with this process.
2. Initial lender review
   The lender checks whether the case may fit its criteria.
3. Property valuation
   The lender needs to understand the value of the property being used as security.
4. Legal review
   Solicitors check the legal position of the property and loan.
5. Loan offer
   If approved, the lender issues the terms of the bridging finance.
6. Drawdown
   The funds are released.
7. Exit and repayment
   The loan is repaid when the property is sold, refinanced, or another agreed event happens.

The timeline can be faster than a traditional mortgage, but it still depends on the lender, valuation, legal work, and how prepared the borrower is.

The Bottom Line

Bridging finance Ireland can be useful when there is a short-term gap between needing money and receiving money.

Remember:

• Bridging finance is short-term
• It is usually secured against property
• It can help with buying before selling
• It may be useful for auctions, renovations, and property investment
• It is usually more expensive than a normal mortgage
• A clear repayment plan is essential

A bridge loan can be helpful when the exit is realistic and the borrower understands the cost.

However, it can become risky if the sale, refinance, or repayment plan does not happen on time or is unpredictable.

If you are considering bridging finance, Irish Mortgage Brokers can help you review your options, compare lenders, understand the risks, and decide whether bridging finance is suitable for your situation.