What is a Bridging Loan?
A short term loan that can be used to ‘bridge the gap’ whilst waiting for a longer term funding solution to be ready.
Why Choose a Bridging Loan?
A bridging loan can be useful if you need to borrow money for a short period, whilst waiting for more permanent funds to come through, such as from a property sale.
How it Works
Bridging funding is typically quick to apply for and obtain, with shorter repayment periods than other types of business finance.
Bridging Loans at a Glance
Equity within residential or commercial property or land.
First or second legal charge.
Loans from £20,000 - £25m +
Decision in principle in as little as 24 hours. Funds available in 2 - 6 weeks
3 - 24 months
Monthly serviced, rolled-up or retained options
From 0.42% per month
Up to 80% LTV
What is Bridging Finance?
Bridging finance offers a short-term borrowing solution to businesses or individuals who require a fast turnaround and is often used to bridge the gap while waiting for future cash, such as from the sale of property or assets.
Bridging finance is typically used on property developments or projects, but it can also be used for any residential or business loan purpose and is therefore very flexible. As traditional banks and building societies have become more wary about lending, the number of bridging finance companies in the market has increased. The key considerations for lenders of this type of finance is what is known as the ‘exit plan’ and how you are going to pay back the loan at the end of the facility.
Benefits of Bridging Finance
- Decision in principle in as little 3 hours
- Minimal paperwork required
- Funding can be secured quickly, usually within 2-3 weeks
- No early repayment costs and only pay for the time lapsed
- Flexible payments
- May be used for any property and business purpose
- Ideal for auction purposes
- Useful for renovations on properties to increase value
- Use equity within existing properties to grow your portfolio
- Avoid property chains holding up progress
What can Bridging Finance be Used For?
Bridging loans can be used for any purpose, personal or business, though most often they are used for the purchase or renovation of an asset or property. They are widely used by property developers for this reason as they allow fast access to cash while waiting for a mortgage to be obtained. They can also be used for business purposes. Some examples of what our clients have typically taken bridging finance for include:
- Expanding an existing property portfolio
- Property refurbishment
- Property purchase (e.g. while waiting for an existing property to sell – effectively bridging the gap between sale and completion dates in a property chain)
- General commercial / business purposes (e.g. for cashflow, equipment, or paying a VAT bill)
- Overdraft type facilities – allowing you to purchase assets at auction
- For construction companies: to assist with capital for completion of works or while waiting for a large payment to come through
To discuss if bridging finance could make sense for your funding needs, please get in touch with our commercial finance specialists today.
Bridging Finance Calculator
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