Bridging Loans

Bridging Loans

The property industry moves fast and opportunities come and go in a matter of days. A bridging loan allows you to complete a quick purchase or to refinance an existing asset in a short period of time.

What is a Bridging Loan?

A Bridging Loan is a type of short-term property backed loan. As with long term commercial mortgages, they are secured by a first or second charge against the property. As they are secured, then similar to long term loans, the same steps in terms of valuation and legal charge must be completed.

Bridging loans are designed to be arranged quickly and to run for a 1-24 month duration. There are different types of loans depending on what you need: 

  • Retained Interest – Interest is taken from the loan balance at the start of the term, with the option to pay back the balance at any time, usually with no exit penalties. Because interest payments are already taken from the loan balance, there are usually no affordability checks.

  • Serviced Interest – Interest is paid by the borrower on due dates. 

How a Bridging Loan can be used

Bridging loans can be used to help businesses bridge the gap between making a purchase and other funds becoming available. They can also be used in any of the following circumstances:

  • To purchase a property while you wait to sell another

  • Property development

  • Refurbishment

  • Paying a tax bill

  • Auction purchases