Bridging finance is a short-term property backed product to raise capital quickly and can be used for almost any legal purpose. Competition, lower costs, and the following factors have driven demand in recent years:
Speed – bridging loans typically takes between 1 to 4 weeks to arrange from initial application to completion. Comparing this to a traditional residential/commercial mortgage or business loan that can take several months.
Security – Bridging loans can be secured against any type of property including residential, Mixed, semi commercial, flats above shops, commercial and development land. Unlike high street lenders, they can also lend against unmortgageable property that require refurbishment or management prior to long term refinancing or sale.
Flexibility – bridging finance lenders differ widely in criteria, terms, and type loans offered. For example, not all lenders will fund heavy refurbishments or have appetite to lend to a non-UK resident. However, if the lender understands the purpose of the loan, is comfortable with the value of the security and the borrower’s ability to repay the loan time – the following factors are generally of lower importance when assessing a bridging loan application:
- Poor credit history – bridging lenders are more concerned about the value of their security and viability of the exit strategy. An individual or company with a poor credit score or less than perfect credit history can still borrow, but with an adjusted LTV and pricing to compensate for the higher credit risk.
- Income and affordability – in most cases, insufficient personal or business income is not a factor to approve a bridging loan as interest is retained (deducted) or added to the loan and factored into the overall LTV.
- Accessible – with the help of a good bridging loan broker, property professionals can access over 100 bridging lenders operating in the UK. Affordable, flexible and ability to tailor loans to diverse set of circumstances.
- No deposit finance – 100% bridging loan is possible if loans are advanced against market value instead of purchase and by providing additional security by way of a first, second or even third charge to ensure the lenders overall LTV criteria is not exceeded.
- Purpose – you can use the loan for any legitimate reason.