Bridging Finance is a short-term loan secured against any type of property or land on an interest-only basis. You can have a Bridging Loan for one day or one year. A bridging loan can be made to an individual or a limited company.
At Morrison Ward, we can refer you to one of our preferred, reputable firms who specialise in bridging finance.
The Bridging Finance market is proving increasingly popular with brokers for a number of reasons. Below are a few examples of how Bridging Finance can be used.
Speed – A typical Bridging Loan will complete, on average, in 5–8 working days. Having access to finance in this timeframe can be particularly useful to property developers who have the opportunity to secure a great deal if they can complete quickly.
Auction Purchases – Bridging Loans are popular with individuals who purchase properties at auction and have to complete within 28 days. The speed of Bridging Loans is the perfect solution for clients who are unable to complete on traditional finance in the required timeframe.
Broken Property Chain – If you want to purchase a new property, but are still in the process of selling your existing residence, a Bridging Loan enables you to secure the new property before the sale of your existing property goes through. The Bridging Loan can be secured against the new property being purchased or any other properties owned by the borrower. In some instances, 100% of borrowing can be raised to secure the new property for you.
Bridging loans are faster to arrange and much more expensive than a mortgage or other type of secured loan. You should only consider this option if you have a clear way to repay it within a short time – for example, selling a house.
Uninhabitable Properties – Traditional lenders, especially on buy-to-let mortgages, will often not lend on a property if there is no kitchen, bathroom, central heating or running water (if it is considered uninhabitable). A Bridging Lender, by contrast, will base it’s lending on the property’s value in its current condition and therefore allow you to get access to a property and make it habitable. Once habitable, the property can then either be sold or a buy-to-let mortgage can be secured to pay off the Bridging Finance.
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 traditionally, Bridging can be used to extend the lease, making the property mortgageable through more conventional sources.
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MWA and Primis Mortgage Network are not responsible for the advice supplied by the third party, however, through experience, we are confident that the firms we recommend are competent, pro-active and focused on providing a high level of service.