When circumstances demand a versatile, quick fix solution to your needs
Bridging finance is a short-term loan secured against any type of property or land on an interest-only basis. The term of a Bridging Loan is from as little as one month through to a maximum of 18 months. Bridging finance is available to an individual or a limited company.
Interest and the lenders arrangement fees are typically rolled into the capital advance, therefore there are no monthly mortgage payments to be met. Consequently, Bridging finance is not underwritten on affordably, instead, lenders are looking for a clear exit strategy, which will allow the funding to be redeemed, within the short-term period of the loan.
Bridging loans are faster to arrange and much more expensive than a mortgage or other types of secured loan. You should only consider this option if you have a clear way to repay the bridging finance quickly; for example, selling a house.
Below are the main uses and advantages of bridging finance
A typical Bridging Loan will complete, on average, in five to eight working days. Having access to finance in this timeframe can be particularly useful to property developers looking to complete on property quickly.
- Auction Purchases
Bridging Loans are popular with people purchasing property at auction, as they must complete within 28 days. The ability to get Bridging quickly is a perfect solution for clients who are unable to complete using traditional finance in the stipulated timeframe.
- Broken Property Chain
If you want to purchase a new property, but are yet to sell your existing residence, a Bridging Loan enables you to secure the new property before you have sold. The Bridging Loan can be secured against the new property being purchased or any other properties owned by the borrower. Consequently, 100% borrowing is available if needed.
- Uninhabitable Properties
- Property Development
Property Investors may wish to renovate a property in a few months and subsequently sell or re-finance; this can include complex structural changes to a property or light refurbishments. Part-complete projects can also be purchased with bridging finance. In summary, a ‘bridge’ can often be the perfect vehicle for this short-term capital requirement.
- Gain Planning Permission
Bridging against land or property in order to obtain planning and secure development funding, or sell on with the uplift in value.
- Lease Extensions
Where a property has a short lease and cannot be financed conventionally, Bridging can be used to extend the lease, making the property mortgageable through more conventional sources.
This type of business will be dealt with on a referral basis and passed to a trustworthy colleague within my network that specialises in this product area.
Think carefully about securing other debts against your home or property. Your home or property may be repossessed if you do not keep up repayments on a mortgage or other debt secured on it. Information is based upon our current understanding of taxation legislation and regulations. Any levels and bases of, and reliefs from taxation, are subject to change.
Bridging Finance is not regulated by the Financial Conduct Authority.