The period between the sale of the old house and purchase of a new one is crucial. You may not have the exact amount that you require to buy a new residential property. This is because, the amount you get from the old house falls short of the value of the new one.

When you are purchasing a new residence and planning to make a down payment with the proceeds from the sale of a currently owned home, the rest amount can be financed by loans. There are loan plans available in the UK financial market that allows the buyer to take equity out of the current home and use it as down payment on the new residence, with the expectation that the current home will close within a short time frame and the loan amount will be repaid.

Bridging loan is an interim financing for an individual or business until permanent or the next stage of financing can be obtained. Money from the new financing is generally used to pay back required capitalization needs. These loans in general are more expensive than conventional financing because of a higher interest rate, points and other costs that are amortised over a shorter period, and various fees and other "sweeteners" (such as equity participation by the lender in some loans). To compensate for the additional risk involved in these loan plans, the lender in some cases requires cross-securitization and a lower loan-to-value ratio. On the other hand they are typically arranged quickly compared to other loans with relatively little documentation

These loan options are applicable for large scale commercial purpose also. A bridging loan is often obtained by developers and real estate business men to carry a project while permit approval is sought. As there is no guarantee the project will happen, the loan might be at a high interest rate and from a specialised lending source that will accept the risk. After the project is fully entitled, the developer becomes eligible for loans from more conventional sources that are at lower-interest, for a longer term, and in a greater amount.

A bridging loan may be closed, meaning it is available for a predetermined time frame or open in that there is no fixed payoff date. When the loan plan is open there may be a required payoff after a certain time. There are many financial institutions and banks in the UK offering such loan plans. However, the number is less compared to the lenders dealing with other loans due to the speculative nature, risk, lack of full documentation, and other factors, that do not fit the bank's lending criteria.