Bridging Loans and Project Dreams

Whenever you work with property, you may run into a situation which requires funding fast. In these situations, you can get the project moving again with a bridging loan.

Typically, a bridging loan is seen as a source of funding when the problem is a gap in a property chain — however you can borrow from Affirmative Finance in many other situations in order to surmount the obstacles and realise that special project.

How bridging loans realise dream projects

By drawing upon our case studies* we can illustrate how bridging loans help in your particular situation:

I. Filling a gap in a property chain

When the bank pulled out of the deal, David was concerned that he was not only going to lose the new property, but a substantial deposit of over £150,000. With three days until the due completion date, this meant that there was no time for the usual bureaucracy; he needed to find the finance soon.

Affirmative stepped in with a bridging loan. We undertook a valuation, secured £332,000 over the property, and completed the deal within the deadline. David was able to get the keys shortly after.

II. Buying auction properties

At auction, it is possible to purchase properties with the help of a bridging loan.

Solicitor Mark wanted to buy a property at auction. He had seen the property in a catalogue and he decided though it needed work, it would make a great investment. He didn't have much time but he could see the property had potential. What to do?

We stood in, made some enquires about the property and provided Mark with a credit line, secured as a second charge on an existing property. This allowed him to use a flexible bridging loan to complete the property deal within 14 days, and begin work on his investment.

III. Working with unmortgageable properties

Even if the property is a good investment, there are a number of reasons why it might be impossible to get a mortgage from the bank. Bridging loans for unmortgageable property can be a perfect source of fast finance.

Zach, an entrepreneurial property developer, had spotted potential in a fourth property but had exhausted his available funding while waiting for two others to sell. It had no bathroom or kitchen, so many lenders would not deal with it. That's when Zach spoke to us.

We supported Zach with a bridging loan, allowing him to release a portion of the equity tied in the other properties, secure funding for the fourth property and begin the work to make it a great investment.

IV. Buy, build, improve

Whatever property you own, you might find yourself in a situation which demands fast funding —perhaps to refurbish the property to the level you desire, make extensions or build on land.

John had a house with a large garden and had obtained planning permission to build another property in this space. At first, he was still paying off the mortgage on his current home, so building this new dream property wasn't an option. With only so long to act on planning permission, John needed and wanted to get things moving.

We stepped in. First we helped in the legal process of splitting the title. Then we facilitated a bridging loan to allow him to build. Once the new property was built he sold the old place, redeemed his mortgage, paid off our loan, and moved in mortgage-free.

V. Other ways we can help you

There are many other ways private individuals use bridging loans to help in specific situations, such as a source of finance in an emergency.

High flying and self-employed businesswoman Joan was concerned when she received a tax demand for £50,000 – and it needed to be paid quickly too. Going through her mortgage provider would have taken too long and drawn out the process. She needed to act soon.

We stepped in straight away: within 48 hours we secured a second charge on her business premises, paid off the tax bill, and got Joan back her peace of mind.

Your bridging loan

From moving over a gap in funding to improving your own home, these are some of the situations in which a versatile bridging loan helps.

If you would like to know if a bridging loan of between £10,000 to £5 million is right for your particular project, call our Manchester office on 08000 44 84 84.

*In respect of privacy, we have changed the name of each person