What is Bridging Finance?
Whenever you need to raise money quickly against the value of a property then bridging finance can be the ideal solution. Some of the key benefits or using bridging finance are:.
- Immediate decision in principle
- Up to 85% Loan to Value with 100% of purchase price possible
- Simple and efficient application procedure
- Interest can be added to the loan
- No minimum term or exit fees
- Loans available from £30,000 upwards.
- Non Status loans available, with no credit checks or references.
Bridging finance is usually repaid on an interest only basis, rather than capital repayment, with the loan being cleared on the sale or refinance of the property. This can involve a commercial mortgage, buy to let mortgage or other long term finance.
Bridging finance Explained
A bridging loan is a short-term loan secured against a freehold or long-leasehold property allowing business people and individuals to:
- Borrow money against market actual market value of a property rather than a discounted purchase price.
- Purchase one property before completion on the sale of another
- Arrange temporary funding for the purchase of a an un-mortgagable property pending repairs.
- Fund the purchase of a property in need of refurbishment, with a view to resale on completion of the improvements. In these circumstances we can also arrange additional funds cover the cost of the works.
- Beat a deadline to buy a property, for example funding the urgent purchase of a property pending arrangement of a long-term mortgage. This can be particularly useful in auction situations
- Release cash quickly without being tied into a long-term mortgage
- Borrow short-term against the value of a property, not against income multiples.
The list is nearly endless, but the common denominator for those requiring bridging finance is that the loan is required at short notice.
What is Bridging finance Secured Against?
Whether you need business bridging finance or personal bridging finance the funds can be secured against residential, semi-commercial or commercial property, or indeed a mixture. Bridging finance companies will lend against freehold or long-leasehold property anywhere in the UK on a first or second charge basis. Below are some examples of the types of property often used to secure a bridging loan:
- Residential property, including investment property and HMO's
- Residential developments
- Commercial property, including factories and warehouses
- Commercial developments
- Offices & Retails units
- Land (even land without planning permission)
Due to the short-term nature of bridging finance the rates can seem expensive at first glance, however it is worth considering the costs against the benefits of having funds arranged quickly.
Applying for bridging finance:
Applying for bridging finance is very similar to applying for any other type of loan. The biggest difference is the time it takes to arrange. It is not unusual of for a bridging loan application to be completed within a week, so long as a valuation can be arranged quickly and that the solicitors are able to complete their work in time.
As part of our commitment to transparency we only deal with bridging lenders whose terms, fees, and rates are totally clear form the outset. So you can be assured that we will negotiate the most competitive bridging finance rates available. In the majority of cases we do not charge a broker fee for arranging bridging finance.
As bridging loans are normally only arranged for a short period of time the interest rate can appear higher than long term borrowing. Although this means that bridging finance can appear expensive at first glance it is worth bearing in mind that the cost is a short-term one. The expenses should be weighed against the consequences of not taking out the finance. However it is always worth shopping around for the most competitive bridging finance rates.
