Bridging finance

Bridging loans work by literally bridging the gap in your finances from the purchase to the sale of property.

This type of lending helps your project move forward by giving you access to funds, quickly, when you need it.

Features of bridging finance:

• Bridging loans can be arranged quickly.
• They can be used as a short term alternative to a traditional mortgage on any type of building, or for development or refurbishment projects that do not qualify for a traditional mortgage.
• The cost of borrowing tends to be higher than a traditional mortgage.

How times have changed!

Bridging loans now are an integral part of our business and the sheer numbers of lenders in the bridging market are testament to what a progressive and competitive market bridging is. No longer are they simply for chain breaks, bridging loans are used in a variety of ways and the really good news is that the number of lenders offering this funding has meant that the rates have been forced down.

But what’s available? How much will it cost? Will you be eligible?

Let’s break it down.

Bridging loans are available, in most cases, secured against a real estate asset. That could be residential or commercial, your main residence or a buy to let, a plot of land with planning or a retail unit with a new lease. The scenarios are endless.

The asset class will define the percentage of value the lender will lend against. Residential usually attract a higher LTV to commercial simply because the exit, if refinance, attracts a lower LTV.

The key to a bridging loan is the exit. Exit is king! Without a defined exit you won’t be able to secure a bridging loan. If exit is sale, the lender will need to understand what other options there are, for example, refinance.

Bridging loans are, by definition, a short term option which is why rates, although lower than ever, are still higher than standard term loans.