A bridging loan is a type of short-term finance that typically lasts for 12 months or less. It provides fast and flexible funding for all kinds of purposes, and is used by individuals, investors, businesses and property developers.
What Are Bridging Loans Used For?
Bridging finance was traditionally used to ‘bridge’ gaps in property chains, but today it is more widely used. Homebuyers, property developers, landlords, investors and self-build enthusiasts all use it to complete projects, including initial purchases.
How Is a Bridging Loan Different from a Regular Loan?
Whilst many high-street lenders will take months to process loan applications and to release funds, bridging lenders are far quicker and much more flexible. For example, you can take a bridging loan out in multiple stages so that you only pay interest on the money that has been released to you, and if you prefer not to make monthly interest payments, there is also the option to retain your interest (and not just your fees) from the loan.
Whether you are buying a dream home or investing in a new development, bridging finance will provide you with secure finance fast.
- Purchases – buy residential, semi-commercial or commercial properties quickly. Bridging lenders can also assist with the purchase of land with and without planning
- Downsizing – save money and release assets by moving into a smaller, more manageable home
- Auction purchases – when you purchase property at auction, bridging finance allows you to put deposits down quickly (from pre-approved auction bidding facilities) and to fund the rest of the purchase, in accordance with the terms of the auction contract which normally provides for completion within 10 – 20 working days
- Quick completions – benefit from discounted prices and gain the edge over other bidders
Building, Refurbishment and Extension Projects
Bridging finance can also be used to fund building, refurbishment and extension projects.
- Development of property – turn an existing commercial building into flats with the assistance of permitted development rights, or convert a large old house into a HMO (House in Multiple Occupation)
- Self-builds – create your ideal home or even a grand design
- Barn conversions – create a truly unique property or a luxury home for yourself
- Refurbishments – avoid the hassle and stress of moving by refurbishing your existing home, or buy a run-down property to renovate and sell on for a profit
- Extensions – either with planning permission or where permitted development rights are available you could create that perfect living space
Flexible bridging loans can be more suitable than bank loans, particularly in the following scenarios:
- Unmortgageable properties – houses with no bathroom, kitchen or plumbing, or non-standard builds and construction
- Buying before selling – do not wait to make an offer on that perfect property
- Cash flow requirements – we can step in if your bank delays
- Consumer buy to let loans
- Foreign currency loans – if you are resident in an EEA country or if some of your income and assets are outside of the United Kingdom. We will still need security over property within England, Wales or Scotland
Investors, businesses and entrepreneurs also take advantage of bridging loans to:
- Purchase assets
- Increase business cash flow
- Invest in projects overseas
- Make tax payments, such as income, capital gains, corporation, VAT and PAYE
Using a Bridging Loan to Complete Your Project
We offer loans from £10,000 to £5 million, so we are equipped to help you complete your projects and fulfil your ambitions. Whether you want to simply refurbish your home or you wish to take on an ambitious development venture, make a quick enquiry to find out what a bridging loan could do for you. To find out more, read our simple bridging finance guide.