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Often, in the process of selling and buying Real Estate, the seller of a property may need to close on a property deal before the buyer has his own property sold.  When a problem with timeliness occurs, there is no need for the new buyer to loose out on the property he wants to purchase. 

According to the Council of Mortgage Lenders, bridged loans can allow an individual to buy a new house before the sale of their old one has finalized. In this way, both transactions can occur and the buyer will be prepared with the funds necessary to purchase the new property.

A spokesperson for the Council of Mortgage Lenders asserted that the name “bridged loan” is derived from the ability to bridge the gap between two secure financial transitions.

“Bridging finance is the main and obvious route where there is a mismatch between the purchase of a property and the sale of the former property,” she explained. However, she also asserted, “It shouldn’t necessarily be seen as a long-term solution to any property-related transaction.”

Secured home loans are an additional means of releasing equity in a property prior to its sale, when additional funding is needed.

In 2005, data published by PriceWaterhouseCoopers showed that 82% of all borrowing was secured, with property used as collateral.

Datamonitor, a financial industry analyst, foresees an “encouraging future” for secured loans in the UK, despite the recent credit crisis fallout caused by the sub-prime lending chaos in the US. 

The research has shown a growing trend in consumer demand for secured loans in the UK - in the not too distant future - regardless of the continuing crisis in the US, which is expected to last at least through the year 2008. Many analysts in the US concur that little recovery is expected for their lending markets until mid-2009.

Maya Imberg, a financial services analyst stated, “Some lenders will withdraw from the market for a short while before returning, thus affecting the market in the [UK], in the short-term, rather than the long-term.” 

In 2006, the total amount lent to consumers in secured loans was roughly £7.5 billion. And, at an average compound growth of 5% each year, consumer demand is likely to see the amount increase to £10.2 billion by 2011.

Datamonitor’s research also revealed a comparative increase in consumer debt of approximately 41% between the year 2000 and 2004. The over-all consumer debt index is also unlikely to wane from predictions of slight continual increases in the foreseeable future.