Bridging finance, also known as a bridging loan, is a flexible, short-term loan that can be used to cover short term financing needs where a traditional mortgage is not available
Short Term & Flexible
Can finance off Gross Development Value (what the value could be with works done)
Perfect for auctions & property development
Faster than traditional mortgage
No monthly payments – Payments can be added to the loan
Bridging Finance
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FAQs
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Is Bridging Finance expensive?
Rates start from 0.8% per month but can vary. Depending on how you use bridging finance, you could walk away with a profit as it allows you to access funds for development, or even come into a property sale with funds readily available meaning you may be able to negotiate a better price.
To ensure that you're raising funds in the most cost effective way, our expert advisers will also review your mortgage options, personal loans and even the possibility of raising a further advance from your current lender, all before discussing your financial options with you.There are many ways you can benefit from bridging finance. However, bridging finance isn’t suitable for every scenario, which is why it is worth talking to one of our specialists for advice on whether bridging finance is right for you. Our experts have a duty of care toward our clients and will investigate your exit strategy to ensure your repayment plan is a viable option. If your exit strategy carries any form of risk, we will discuss a backup plan with you so you are fully prepared should anything disrupt your original exit.
What is the maximum loan to value?
Who can qualify for Bridging Finance?
Anyone over 18 could qualify for bridging finance, with the only limitations being that it must be secured against property or land and paid back within an agreed timeframe. On average, this is around 12-24 months.
What is “Interest Roll-Up”?
Interest roll up means you pay off the interest in a lump sum at the end of the loan, rather than monthly.
How quickly can Bridging Finance complete?
On average 2 weeks, but our specialist lending team are often able to secure bridging finance within a week. This is because they have expert knowledge and access to the whole market, enabling them to quickly and efficiently match you to the best lender for your individual requirements.
They will also ensure your application meets all criteria and specifications necessary so there's no delay in your funds being released.
Does the property need to be habitable?
88%
Based on 468 reviews
Three Reasons to Choose Bridging Finance
Flexibility
Whether you’re buying land without planning permission, a dilapidated house, a high-rise office block, or a traditional family home, bridging finance has the flexibility to cater for almost any secured financing need.
1
Speed
Bridging lenders move fast so you can close your property chain, or compete with cash buyers.
2
No monthly payments
Keep your budgets simple whilst you focus on doing what you need to do to complete your project or property sale.
3
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Want To Know More About Bridging Finance?
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What is Bridging Finance and what can it be used for?
Bridging Finance is a short-term mortgage designed for property buyers and developers, typically lasting 12 to 24 months, or less. Bridging Finance is mainly used as a means of short-term property finance - for instance, to break a mortgage chain - whilst you await more permanent funding solutions, or the sale of the property being bridged.
Bridging Finance can also be used for carrying out property renovations and purchasing property or land that is deemed unsuitable by traditional mortgage lenders.
Customers buying a property at auction also favour Bridging Finance as these mortgages are much faster to obtain than a traditional mortgage - with some lenders boasting just one week from application to completion, compared to several months for a traditional mortgage. This speedy approach can also benefit buyers who have a tight completion deadline or whose chain has fallen through. Bridging Finance allows you to finance properties that traditional lenders often will not, such as those that are valued below £50,000, derelict properties, properties with structural issues, or that are lacking kitchens and bathrooms. This makes Bridging Finance ideal for investment and auction properties.
Purchasing a property at auction
Buying a property whilst awaiting permanent funds
Increasing your property portfolio
Buying an unmortgageable property for renovation
Purchasing a plot of land whilst you await planning permission
Bridging Finance at a glance
Another unique benefit of Bridging Finance is the way in which interest is paid, or serviced, by the borrower. Unlike a traditional mortgage where a borrower makes a monthly interest payment, most bridging lenders will add the interest to the loan, meaning that the borrower will not have to make any payments to the lender for the first 12 or 24 months.
When the property is sold or refinanced, the original Bridging Finance plus any accrued interest will be payable in one lump sum from the proceeds. This means you will not need to worry about budgeting for monthly repayments whilst you await your permanent finance solution or property sale. This can help with short term cash flow whilst a more permanent finance solution or sale is achieved.
Are there monthly payments on Bridging Finance?
Can I use the future, or improved, value for lending purposes?
Gross development value (GDV) is a valuation metric that most property developers and investors will be familiar with when calculating financial returns on property development projects. The Gross development value of property investment projects is an estimate of the final value of that property once the planned development works have been completed.
Some lenders will use the Gross Development Value to calculate the maximum amount they’re prepared to lend. This could enable you to secure a property at a lower price, and use the extra amount loaned to complete the necessary works which subsequently increase the property value at the point of refinancing.
Bridging Finance for Property Developers
For property developers, Bridging Finance allows access to quick funding to purchase property or land or a renovation project. The funds raised can be used to carry out any required work to make the property mortgageable, or to obtain planning at which point the project could be sold or refinanced.
Example
Our client was an experienced buy-to-let property investor, who wanted to purchase a property that did not have a functioning kitchen or bathroom which meant a traditional lender would deem the property unmortgageable. In this scenario, time was of the essence as the client needed access to funding to purchase and renovate the property quickly so they could put it on the rental market and start earning an income.
We arranged bridging finance for the customer, allowing them to purchase the property and finance the renovation works. This meant that at the point of refinancing with a traditional lender, the property was valued at a higher price than it had been prior to the works being carried out and our client was able to walk away with a profit and rent out the renovated property.
It's not always possible for a property chain to complete simultaneously. If you’re moving house and need short term finance to purchase whilst you await a traditional mortgage or sale of your property, a bridging mortgage can provide a temporary solution.
Example
Our client was due to complete a house purchase when their buyer encountered severe delays on their related sale. This would usually cause a chain fall through and our client was going to miss out on their dream home.
Our specialist advisers were able to move quickly and secure bridging finance which allowed our client to access the funding needed to complete on their new purchase, whilst they waited for their house sale to complete, which came through several months later. At this point, they were able to pay off the bridge in full and were already happily settled in their dream home - which they would’ve lost out on without the aid of bridging finance.
Bridging Finance for Home Movers
Most auctions require a buyer to complete within 28 days of submitting a winning bid. Its unlikely that a traditional mortgage lender and solicitor will be able to meet this deadline. Bridging finance can be useful if you are buying property through auctions, as you can access funding quicker, sometimes in as little as 5 days, whilst your traditional mortgage is being applied for in the background.
Example
Our client wanted to purchase a property at auction. However, auction purchases usually need to be completed within 28 days, so tend to only work for cash buyers. Traditional mortgages could not complete in such a short time
Our advisers arranged bridging finance for the customer to secure the property at the auction. Once the property was secured, he then refinanced long-term through a traditional mortgage lender. Bridging finance in this scenario provided a short term means to finance a property where a traditional mortgage just would not be available fast enough.
Bridging Finance for Property Auctions
Are there monthly payments on Bridging Finance?
Another unique benefit of Bridging Finance is the way in which interest is paid, or serviced, by the borrower. Unlike a traditional mortgage where a borrower makes a monthly interest payment, most bridging lenders will add the interest to the loan, meaning that the borrower will not have to make any payments to the lender for the first 12 or 24 months.
When the property is sold or refinanced, the original Bridging Finance plus any accrued interest will be payable in one lump sum from the proceeds. This means you will not need to worry about budgeting for monthly repayments whilst you await your permanent finance solution or property sale. This can help with short term cash flow whilst a more permanent finance solution or sale is achieved.
Can I use the future, or improved, value for lending purposes?
Gross development value (GDV) is a valuation metric that most property developers and investors will be familiar with when calculating financial returns on property development projects. The Gross development value of property investment projects is an estimate of the final value of that property once the planned development works have been completed.
Some lenders will use the Gross Development Value to calculate the maximum amount they’re prepared to lend. This could enable you to secure a property at a lower price, and use the extra amount loaned to complete the necessary works which subsequently increase the property value at the point of refinancing.
Examples of Bridging Finance
Bridging Finance for Property Developers
For property developers, Bridging Finance allows access to quick funding to purchase property or land or a renovation project. The funds raised can be used to carry out any required work to make the property mortgageable, or to obtain planning at which point the project could be sold or refinanced.
Example
Our client was an experienced buy-to-let property investor, who wanted to purchase a property that did not have a functioning kitchen or bathroom which meant a traditional lender would deem the property unmortgageable. In this scenario, time was of the essence as the client needed access to funding to purchase and renovate the property quickly so they could put it on the rental market and start earning an income.
We arranged bridging finance for the customer, allowing them to purchase the property and finance the renovation works. This meant that at the point of refinancing with a traditional lender, the property was valued at a higher price than it had been prior to the works being carried out and our client was able to walk away with a profit and rent out the renovated property.
Its not always possible for a property chain to complete simultaneously. If you’re moving house and need short term finance to purchase whilst you await a traditional mortgage or sale of your property, a bridging mortgage can provide a temporary solution.
Example
Our client was due to complete a house purchase when their buyer encountered severe delays on their related sale. This would usually cause a chain fall through and our client was going to miss out on their dream home.
Our specialist advisers were able to move quickly and secure bridging finance which allowed our client to access the funding needed to complete on their new purchase, whilst they waited for their house sale to complete, which came through several months later. At this point, they were able to pay off the bridge in full and were already happily settled in their dream home - which they would’ve lost out on without the aid of bridging finance.
Bridging Finance for Home Movers
Most auctions require a buyer to complete within 28 days of submitting a winning bid. Its unlikely that a traditional mortgage lender and solicitor will be able to meet this deadline. Bridging finance can be useful if you are buying property through auctions, as you can access funding quicker, sometimes in as little as 5 days, whilst your traditional mortgage is being applied for in the background.
Example
Our client wanted to purchase a property at auction. However, auction purchases usually need to be completed within 28 days, so tend to only work for cash buyers. Traditional mortgages could not complete in such a short time
Our advisers arranged bridging finance for the customer to secure the property at the auction. Once the property was secured, he then refinanced long-term through a traditional mortgage lender. Bridging finance in this scenario provided a short term means to finance a property where a traditional mortgage just would not be available fast enough.
Bridging Finance for Property Auctions
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THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.
There may be a fee for our advice and service. The actual amount you pay will depend upon your circumstances. The fee is typically £998.
*Representative example: If you borrow £255,000 over a 25 year term on a fixed interest rate of 4.41% for the first 2 years, followed by 7.65% variable for the remaining term, your monthly payments for the initial 2 years will be £1,408.51. Representative APRC of 7.3% variable. The total amount of interest and capital you'll repay over the term of the loan will be £553,892.20. This example includes £1,124 of fees in total, which may be payable to the lender or to Finamply.
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