Bridging finance is used to fund the gap between when you need to pay to purchase something, but you’re waiting for funds to become available from the sale of something else.
When is Bridging Finance used?
Bridging finance has many uses. It’s not a case of one size fits all. It’s more about providing a flexible solution when funds are required quickly! The bridging facilities we arrange cover a variety of situations and can include:
I need to complete quickly – Bridging is often used if there’s an extremely tight deadline to complete a property purchase. This can include auction purchases where completion is usually required in 28 days and a typical mortgage would take too long. Unless you are a cash buyer, a bridging loan is the next fastest solution.
‘Breaking the chain’ – When a property is going to be purchased but there’s another waiting to be sold, the bridging loan provides a short-term solution that enables you to complete.
Refurbishing properties – Depending on the level of refurbishment work required, bridging loans enable you to purchase the property, carry out the refurbishment and then either remortgage or sell it once the work is complete.
Unmortgageable properties – Some properties needing extensive refurbishment are often deemed ‘unmortgageable’ by mortgage lenders until the necessary work is carried out. Whilst a typical mortgage lender may not view the property as suitable security, a bridging loan will enable you to complete the purchase and carry out whatever work is required to put it in a mortgageable state.
Development exit strategy – Mainly used by developers who are nearing the end of the current development facility and require a bridge to clear it, providing them with more time to sell their developed properties
Below Market Value purchase (BMV) – Properties being purchased below their actual market value. This usually happens when the vendor needs to sell the property quickly and the purchaser takes the opportunity to negotiate a discounted purchase price. In these instances, mortgage lenders will typically lend against the purchase price rather than the market value. However, some bridging lenders are comfortable lending against the market value, thus reducing the level of deposit required from the purchaser.
We work with all lenders and can find a solution that meets your specific needs. If you need finance, fast. Our team is here to help.
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