In recent years, bridging loans have become an increasingly popular funding option that can assist you in a myriad of different ways.
In the past, bridging loans were most commonly used by property professionals such as investors, landlords and property developers who needed to “bridge” between one property and another.
However today, bridging loans are used by many business owners for a variety of reasons.
Here are some of the reasons, we have helped clients raise bridging finance:
- assisting with the purchase of another property whilst an existing property is being sold
- to buy a property without planning permission whilst a planning application is made
- to provide short term working capital for a business
- to buy out a partner
- to facilitate a divorce settlement
- to pay an outstanding tax bill or other debt
- to buy a property at auction
- to cover the cost of expansion
- to buy additional stock
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Commercial bridging loans can be invaluable in facilitating the raising of finance that otherwise may not be possible.
They are usually quick to arrange and can be used for virtually any purpose. Consequently, a property bridging loan offers great flexibility.
How long can I have a bridging loan for?
A bridging loan would normally be available for between 6 and 12 months.
The key for any lender providing a bridging loan is that you must be able to demonstrate a clearly defined exit strategy as to how the bridging loan will be repaid at the end of the term.
This would normally be by selling the property on which the bridging loan is secured or refinancing onto a longer-term commercial mortgage.
What types of property can be used as security for a bridging loan?
A prerequisite when you apply for a bridging loan is that the loan is secured on a property asset on which the lender can take security.
It can be virtually any type of property, and over the years I have raised bridging loans on many types of property. These have included residential and commercial properties, investment properties, development properties, warehouses, retail units, hotels, and plots of land with or without planning permission.
A property bridging loan is a great short-term option, where funds are required quickly, and we have helped clients raise finance within a matter of days.
However, please remember that a bridging loan is exactly that – short-term.
It is a loan to ‘bridge you’ through a short-term funding requirement, and certainly not a replacement for long term funding.
However, a commercial bridging loan has a crucial role to play as part of an overall funding solution and is a great tool when funding is needed quickly or for a short period.
To find out how we can help you raise funding quickly and apply for a bridging loan, contact one of our brokers today. For other property finance options, learn more about property development finance and property investment finance.
