What is Bridging Finance?
Bridging finance is a short-term loan, usually for 12 months or less, that is used to ‘bridge’ the funding gap until permanent finance to fund your development is in place.
Flexible and secured, it provides you with the quick cash injection that you may not have been able to secure elsewhere.
What types of bridging finance are available?
Dependant on your situation, there are two types of loans to choose from:
A ‘Closed’ bridge loan
This is used when there is a set date for when the loan must be repaid. You’re likely to be eligible for this type of loan if you have a long-term funding option already arranged, such as the sale of your existing property.
An ‘Open’ bridge loan
This type of loan is useful when there isn’t a definite long-term finance option in place. The loan may run for six or nine months, however, depending on the circumstances, this may be longer.
When should you use bridging finance?
Bridging loans can be used for a variety of reasons, such as property investment, buy-to-let schemes and development opportunities. It can be used for both commercial and residential property transactions.
Utilising a bridging loan in comparison to other types of finance has many advantages. Especially if you only require the finance for a short period of time. In the instance of buying property, it may not be possible to attain another mortgage until your existing property is sold, so you might consider a bridging loan to cover you over that period.
Bridging loans are designed to help you achieve the purchase of a property you want, before having to sell your existing one.
The funding also enables you to take advantage of opportunities such as, securing property deals quickly at discounted prices or resolving emergency situations.
Will my credit history affect my bridging finance application?
Since the financial crisis, banks and other lenders have grown more reluctant to lend. However, we will assess each case on its own merits, taking a pragmatic approach that offers you flexibility and quick finance.
We look at both your history and the intention behind your application. A closed bridge loan is typically easier to get, as you already have a permanent financial solution in place. However, with Access Commercial Finance even an open bridge loan could be an option for someone with a less than perfect credit history.
We have a dedicated and experienced bridging finance team who will help you secure the right loan for you, so why not get in touch today to see how we can help!