Bridging Finance

Bridging finance is a short-term loan lending a % of the value of a property.

Bridging finance is typically used for property purchases or refinances where there is a time pressure element or other restrictions, for example, uninhabitable properties or properties that you need to gain for planning permission for.

Bridging finance can be used for both residential and commercial properties and covers almost any property type, for example: houses, flats, maisonettes, land, hotels, shops, offices, retail units, industrial units and pubs.

Typically up to 75%-80% Loan To Value (LTV) or potentially higher with additional security. LTVs can be restricted for a variety of reasons, for example, asset type, location, borrower profile or the exit route.

Bridging finance typically attracts an arrangement fee, and interest either deducted upfront from the loan advance to cover the term of the loan or paid monthly, with the entire loan being repayable at the end of a pre-agreed loan term. There are typically no or limited early repayment charges which allows the borrower freedom to repay the loan early should they be in a position to do so quicker than expected.

Because bridging finance loans are for specific short-term purposes you must have a plan in place to repay the loan on or before the end of the term which is known as an exit route.  A clear and viable exit route is a key part of the application process for bridging finance.

Yes, for example, to purchase the property and carry out light refurbishment works (that you self-fund) before the property is either sold or refinanced onto a buy to let mortgage. For refurbishment projects, where you would like the lender to provide some funding towards the refurbishment works costs, please see our development finance page.

The phrase ‘refurbishment bridging loan’ may be used to either describe a bridging loan that permits you to self-fund light refurbishment works during the loan term and only provides funding towards the property purchase or a loan that funds the build works for the refurbishment in addition to providing funding towards the property purchase. The latter is more closely aligned with development finance, please refer to our development finance page for refurbishment projects where you’d like to borrow funding towards the refurbishment works.

Yes, for example, to purchase land with planning permission where there is not enough time to arrange development finance or where a piece of land is being purchased without planning to allow time to apply for planning permission.

The use of bridging finance for auction purchases is popular because it complements the auction buying process whereby exchange and completion requirements are often more stringent than with a non-auction purchase.

When your development project takes longer than planned or market conditions mean that your finished properties take longer to sell than expected, bridging finance can be used to refinance a development finance loan and allow a further period of breathing space to sell the completed properties.