Bridging Finance

Bridging finance is a short term loan to provide temporary financing until more permanent finance can be found.
As such, it a useful source of funding for a variety of purposes. Capital raising for any purpose pending the sale of an existing property.
To enable the purchase of a property before the completion of sale on another.
Funding the urgent purchase of a property whilst long term finance is being arranged.
Funding the development of a defective property, to allow for works to continue to renovate the property up to suitable standard.
The list itself is not exhaustive, but short term bridging is ideal for:

• Acquisitions
• Auction purchases
• Capital raising
• Investment
• Refurbishment
• Refinancing
• Speculative deals.

Bridging finance itself is secured by a charge over a first or second property, typically up to 75% of the value of the property, and with the majority of lenders funds can be released within 5 days of receipt of a satisfactory valuation. In some cases it is possible to get up to 80% ltv of the property, subject to certain stipulations being met.
There are two types of bridging, open and closed. Closed bridging occurs when the long term finance is already in place, but the funds will not be available within the required space of time. A typical example of this is where exchange of contracts needs to take place on the purchase of a property, but the long term finance will not be available until the proposed completion date.
Open ended bridging is where the repayment source is known, but is not guaranteed. Again, an example of this is where a property will be sold to pay for the bridge, but there is no indicative date as to when the property will be sold.

Bridging Loan Finance - FAQs

Q: What purpose can bridging loans be used for?
A: Acquisitions, Auction purchases, Capital raising, Investment, Refurbishment, Refinancing, Speculative deals

Q: How quickly can I expect to receive the funds?
A: It is possible for funds to be available within 5 days of receipt of a satisfactory valuation

Q: What is the maximum loan to value?
A: Typically 70% of the property valuation, but in some instances we are able to source funding of up to 85% loan to value.

Q: What's the difference between open and closed bridging?
A: Closed bridging is where there is a repayment source for the funding already in place, but will not be readily available within the timescales required.
Open ended bridging is where there is a known repayment source, but no guarantee. For example, whereby someone is selling a property to repay the bridging finance.

Q - How long can I borrow the funds for?
A - This varies from lender to lender, some will insist on a minimum period of 3 months, up to a maximum of 12 months, but with some lenders it is possible to bridge with no minimum period for the loan.

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