Sometimes there just isn’t enough capital readily available to you to do what you need, in these types of situations bridging finance could be the right option. Bridging finance is essentially a short term loan that gets to you extremely quickly, giving you the equity you need to do what you want.
Talk to any bridging loan broker and they will give you a list as long as their arm for what bridging loans can be used for. We know you don’t want to listen to all the spiel, so here are the top four most popular uses:
Speedy purchases
If there is a property on the market that’s going fast and you don’t have time to go through the lengthy process of acquiring a commercial mortgage then a bridging loan can be used to make the purchase. This type of financing is very quick, with the money being available to you the next day in some cases, letting you buy that quick-moving property before it disappears.
This can also be used for when you’re being pressured into buying before you’ve managed to sell your old building. In this situation you have funds tied up in your existing property which, if available, would pay for the new building – bridging allows you to make this transaction without forcing you to take the first offer you receive.
Buying land
More often than not, if you’re seeking to gain development finance to build or renovate properties you will be required to own the land before lenders will consider it. Bridging finance allows you to purchase the land, giving you additional security to acquire further financing and buy you more time to obtain a suitable mortgage.
Unlike other financing, bridging can make up 100% of the funding – regardless of the land being bought. Bridging can be used to buy land with or without planning permission or agricultural restrictions.
Bridging to development
Bridging and development finance are completely separate products, aimed at lenders with very different needs. However, a bridging loan broker knows that the two can work very well together and in some cases you may require bridging finance to gain development. Some development properties would not meet the lender’s credentials for funding as they currently stand and requiring some work to be done before they would consider it. Here, bridging finance gives the developers a chance to make essential changes, improvements and preparations needed to put together a development finance proposal that is likely to be accepted.
Renovations
Found a property that suits you to the ground, but upon the valuation you find that it is not mortgageable? This problem isn’t uncommon, especially in fix-me-up buildings or properties which have been empty for a long time. By taking out a bridging loan you can free up the equity needed to make the changes that will allow you to take out a traditional mortgage. This is also a great option if you’re planning on knocking down the building to free up the land it stands on– either to sell on or rebuild.
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