How do bridging loans work?

Bridging loans work in many ways. The typical loan will have the interest on the loan roll up onto the balance.
They normally only have a short term for lending, generally no more than 12 months as there must be a “repayment strategy” in place. This means exactly what it says, how do you intend to repay the money. For example, if you have enough money for a deposit on a house you wish to buy but have not sold your own home, you can always get a bridging loan on the property you wish to purchase and then once the property you are selling has been sold you can repay that money. Another way is the option to remortgage the property to repay the bridging loan.