As Ireland’s housing market remains tight, a financial tool many people haven’t heard about in years is quietly making its return – Bridging Finance.
Once common before the 2008 crash, bridging loans are now being discussed again as a way to help homeowners buy a new property before selling their existing one. With second-hand homes in short supply and long property chains causing delays, some lenders believe bridging finance could help unlock movement in the market.
But bridging finance is not a standard mortgage, and it is not suitable for most buyers.
This guide explains what bridging finance is, when it can help, where it can go wrong, and what Irish buyers need to think about very carefully before using it.
Key Takeaways
| Topic | What You Need to Know |
|---|---|
| What is Bridging Finance? | A short-term loan used to buy a new home before selling your current one |
| Typical Term | 6–12 months (sometimes up to 18 months) |
| Interest Rates | Higher than normal mortgages |
| Who is it For? | Existing homeowners with strong equity and a clear sale plan |
| Biggest Risk? | Not selling your current home on time |
| Market Impact | May increase second-hand supply, but adds personal financial risk |
| Not suitable for | First-time buyers or buyers without a confirmed exit strategy |
What Is Bridging Loan Finance?
Bridging finance (or a bridging loan) is a temporary loan for exisiting homeoners, that allows them to buy a new property while their existing property is still on sale.
Instead of waiting for your current home to sell, a bridging loan allows you to:
- Secure the new property
- Complete the purchase
- Repay the bridging loan once your old home sells
Again, it is mainly aimed at existing homeowners, and not first-time buyers.
Why Is Bridging Finance Being Discussed Again in Ireland?
After the financial crash 16 years ago, both lenders and borrowers lost confidence in the housing market. Falling prices and negative equity made it too risky for banks to offer these loans, so they were scrapped.
But right now, Bridging finance is back in the conversation due to:
- Very low supply of second-hand homes
- Long property chains that collapse easily (A property chain is a situation where multiple home purchases are linked together, so each buyer’s purchase depends on their own property being sold first. One sale cannot complete unless another sale completes first).
- Sellers are afraid to list their homes before securing their next one
- Buyers are losing homes because they cannot move quickly
Bridging finance is being presented as a way to:
- Free up existing homeowners
- Encourage more homes onto the market
- Reduce stalled transactions
In theory, this could increase supply.
In practice, it shifts risk onto the buyer.
Who’s Offering It?
ICS Mortgages
Already offers products that let people:
- Borrow up to 70% of the value of their current home,
- typically for up to 12–18 months,
- with interest rolling up or paid monthly
- and an arrangement fee of about 1%.
Bank of Ireland
BOI plans to launch its own bridging product in early 2026. Initial details show:
- A variable rate around 7%,
- loans up to 60% of current home value,
- and terms up to 12 months.
How Bridging Finance Works (Step by Step)
Here’s a simplified example:
- You own a home worth €400,000 with a small remaining mortgage
- You want to buy another home for €500,000
- You have equity, but your current home hasn’t sold yet
- A lender provides a bridging loan secured against your existing home
- You complete the new purchase
- You sell your old home
- The bridging loan is repaid from the sale proceeds
During the bridging period, you may be paying:
- Interest on the bridging loan
- Your existing mortgage
- Possibly part of the new mortgage
Typical Features of Bridging Finance in Ireland
While products vary, bridging loans usually include:
- Short Terms – 6–12 months (sometimes 18)
- Loan Limits – Often 60–70% of your existing property’s value
- Higher interest rates – Much higher than standard mortgages
- Arrangement Fees – Often around 1% of the loan
- Exit Requirement – You must show how the loan will be repaid
Some loans allow interest to be “rolled up” and paid at the end, but that increases the total cost.
The Main Advantages of Bridging Finance
1. You Can Secure a Home Without Waiting to Sell
This is the biggest benefit. In a competitive market, being chain-free makes your offer more attractive.
2. It Can Unlock Movement in the Market
If used carefully, bridging finance may help more homeowners list properties, increasing second-hand supply.
3. Useful for Downsizers
People selling larger family homes often use bridging finance to buy smaller properties without having to rush a sale.
4. Avoids Fire-Sale Pricing
You don’t have to accept a low offer on your current home just to complete a purchase.
The Serious Downsides and Risks
This is where buyers must be very careful.
1. It Is Expensive
Bridging loans cost far more than standard mortgages. Even short delays can add thousands in interest.
2. You Are Exposed if Your Home Doesn’t Sell
If the sale takes longer than expected:
- Interest continues to build
- Financial pressure increases
- Lenders may demand repayment or refinancing
This is the single biggest risk.
3. Market Conditions Can Change
If prices soften or demand drops, your expected sale price may no longer be realistic.
4. It Adds Stress
You may end up :
- Managing two properties
- Paying loans on 2 ends
- Relying on timelines you don’t fully control
5. It Can Encourage Risky Behaviour
In a supply-starved market, buyers may overextend themselves just to secure a property.
Who Bridging Finance Is (and Is Not) For
May Be Suitable For:
- Existing homeowners with high equity
- Buyers with a realistic and near-certain sale
- Downsizers moving to smaller homes
- People with strong financial buffers
Not Suitable For:
- First-time buyers
- Buyers relying on optimistic sale prices
- Anyone without emergency savings
- People already stretched by mortgage costs
Common FAQs
What is the Eligibility Criteria & Application Process for Bank of Ireland?
Details have not yet been provided yet but we will update them here once BOI provides full details in Q1 2026.
However, it is very important to note the below announcement from Bank of Ireland:
“…Both properties will serve as security, with the sale of the existing property clearing the borrowing and any interest accrued within 12 months. Maximum borrowing amount will be 60% of current valuation and the loan rate is 7% variable.“
Is bridging finance the same as a mortgage?
No. It is a short-term loan, not designed for long-term affordability.
Can first-time buyers use bridging finance?
No. Bridging finance relies on owning an existing property.
What happens if my home doesn’t sell in time?
You may need to:
- Refinance at a higher rate
- Sell at a reduced price
- Use savings to clear the loan
In worst-case scenarios, legal action is possible.
Does bridging finance increase house prices?
Indirectly, it may:
- Increase competition
- Allow buyers to move faster
But its overall market impact is likely limited due to its risk and cost.
Is this a sign of another property bubble?
Not necessarily, but it does signal structural pressure in the housing system. Bridging finance is a workaround, not a fix.
Key Questions to Ask Before Considering Bridging Finance
Before taking out a bridging loan, ask yourself:
- How confident am I that my home will sell within 6 months?
- Can I afford the loan if it takes longer?
- What happens if prices dip?
- Am I using this out of necessity or fear of missing out?
- Have I taken independent financial advice?
If any of these answers feel uncertain, bridging finance may be the wrong tool.
Final Thoughts
Bridging finance can be helpful in very specific situations, but it is not a solution to Ireland’s housing crisis and it should never be treated as a routine option.
For individual buyers, it introduces:
- Higher costs
- Greater stress
- and real financial risk
For the market, it highlights a deeper problem – people feel forced to take on risk just to move home.
