Bridging Finance
Bridging finance is the term used to describe interest only, short term funding (usually up to 12 months) secured on land or property. Speed of completion is usually critical as bridging facilities are often required to resolve a temporary cash flow problem or to meet tight deadlines.
One of the unique aspects of bridging finance is that, unlike many longer-term financial products on the market, the client is not heavily penalised for repaying the principle sum earlier than the contractual term. Both the lender and the borrower are aware from the start that the finance is only for the short-term.



Underwriting Criteria

• Min Age 18 – No Max Age
• Loan £26,000 - £1,000,000
• Interest: From 0.75% per month
• Term: Up to 12 months
• LTV: Up to 85%, or 100% with additional security
• Freehold properties and Leaseholds with 55 yrs
• Not required – Loan is Non Status
• Interest may be rolled up
  

Purpose

• Immediate finance requirement (e.g. Auctions
• Purchase of property or other assets
• Business Expansion
• Commercial Investment Property
• Property Development

Uses for Bridging Finance
The following examples represent just some of the uses our clients at Bridging Finance Limited have found for our services. 

Capital Raising
At Bridging Finance Limited we lend to companies, trusts & pension schemes, secured against land or property. This allows opportunities to be taken up where large sums of money need to be raised in a short time.  

Site Acquisition pending Planning or Development
One of our most popular uses. We can make funds available in 24 to 48 hours, ensuring that opportunities are not missed. We therefore buy clients valuable breathing space while longer term funding is put in place.

Development Finance
A popular use for a bridging loan and one of the more common purposes we complete on. Funds can be drawn down at various stages during the project and this lends itself perfectly to development opportunities.

Corporate Recovery
Through offering products such as payment holidays or staged capital repayments, a bridging loan can ease clients' difficult financial situations through payments not having to be made immediately after the funds are made available. The funds and focus can be on corporate recovery, easing the immediate pressure on the company.

Tax Liabilities
When a tax demand is made it is often for an amount which companies or individuals cannot access within the required time period. This is a perfect application for a bridging loan, which can be secured on the business premises and/or other property, with funds made available in short timescales.
IVA/Bankruptcy Annulment
A business may need short term funding to meet business obligations and payments or overcome financial difficulties such as bankruptcies and IVAs. A bridging loan can be provided as a second charge behind a mainstream lender, as well as being used as a first charge to annul IVAs or impending bankruptcy. 

MBO/MBIs
Bridging finance is ideal in a management buy out/buy in situation, as there is frequently a short time frame to complete the transaction. Bridging Finance can be used in the interim period prior to the more traditional funding being put in place. 

Payment of Inheritance Tax
A common problem when a client is left with a property is the payment of the inheritance tax prior to probate. Rather than selling the property at a difficult time of year or opting for a quick sale at a lower price, bridging finance can be used to settle the tax liability immediately and allow the property to be marketed properly at the right time of year, which could result in a significant uplift in the sale price.
 


Frequently Asked Questions 

What is a bridging loan?
It is an interest only, short term loan secured on land or property

What can I use a bridging loan for?
You can use a bridging loan for any legal purpose.

What type of property can be used as security?
We will accept residential freehold and leasehold property, commercial property and land. All property used as security must be in England or Wales.

What is a 2nd charge?
If you have a property with an outstanding mortgage, that mortgage lender will have the 1 st charge over your property. If there is sufficient equity available within the property, we (the 2nd lender) can lend you additional funds and we place a 2nd charge on the property.

What is the minimum and maximum loan?
Minimum loan is £26,000 and maximum £1,000,000.

Can I borrow 100% of the purchase price?
Yes, you can borrow 100% of the purchase price if you have additional property or properties to offer as security.

How long can I borrow the money for?
From 1 day to 9 months.

Can I repay my loan early?
Yes you can.

Can I make capital reductions?
Yes, you can reduce the outstanding balance and monthly payments.

How much will a bridging loan cost me?
Interest rates start from just 0.85%. Other costs include an arrangement fee and solicitor costs.

Can I add the interest payments to the loan?
Some of the interest may be rolled up into the loan rather than make the monthly payments.

Why is a bridging loan more expensive than a regular mortgage?
Bridging is more expensive than a regular mortgage as it is a short term financing facility. Traditional mortgages are loans over 25 years whereas bridging loans run from 1 day to 9 months with the average term being 3 months. Warning: Although bridging is expensive, choosing the wrong lender can make it very expensive.

What are the other costs?
Valuation fee on all properties offered as security, lenders arrangement fees, lenders solicitors fees.

What are the exit / redemption fees?
We have no exit or redemption fees.

Do I need my own solicitor?
No, however it is recommended that all borrowers seek independent legal advice prior to signing any legal documents.

How long does it take to arrange funds?
Bridging loans can be arranged as quickly as 72 hours but this is the exception rather than the norm. Loans take on average 5-10 working days to arrange.

I have a bad credit history, arrears or CCJ’s does this affect my application?
No, we offer non status lending, so your credit history does not affect your ability to get a bridging loan or its terms.

I am self employed or have no accounts does this matter?
No, we lend on a non status basis.