What is bridging finance and how could it work for you?
A bridging loan is a short-term loan that can help you ‘bridge the gap’ when you don’t currently have the funds in place. You may want to purchase or remortgage a property, but you’re perhaps waiting for funds to become available on sale or realisation of other assets
How does it work?
It can be applied for as a fixed-term solution when you know the exact date of a sale completion or investment maturity, for example
Alternatively, you may wish to take advantage of an open-ended bridge if you are unsure of timescales
The lender will need to understand your ‘exit strategy’ and will assess the loan application, criteria and interest-rate applied on this basis
How and when can it be used?
Bridging loans are commonly used to buy a new property before the sale of their current one can complete, for example. It can also be applied to many other transactions, such as necessary improvements to the property before a ‘standard’ mortgage can applied for, or final completion of self-builds and developments where the original fund provision has fallen short. The client could be a homebuyer, landlord/investor, business owner for commercial use, or those looking to purchase their retirement home!
Case Study: Facilitating a delayed development
We were approached by a company that had acquired a site for £1,400,000 with £1,200,000 of the funds deferred for 12 months, pending detailed planning approval
Timescales and amendments to the application meant that planning was delayed. Once new planning approval was granted, the value of the land had increased to £2,200,000. Clients then needed further time to finalise and prepare a development plan, and obtain ‘heads of terms’ with the end user
We sourced a £1,000,000 bridging loan for a period of 6 months to allow contracts to be exchanged, and subsequent development finance to be approved
To discuss the options available to you, get in contact with one of our specialist finance brokers today for a free consultation
