Bridging Finance

"Bridging Finance is often used to describe short term funding which can arise from a number of circumstances. This is not a long term solution for borrowers with regards to owning a property as the term of a bridging loan tends to be for a 12 month period ( potentially shorter / longer). Thereafter it will need to be renewed and therefore is quite costly if it is not refinanced after a certain period of time. It is seen as a form of funding to bridge a gap. "

When to use Bridging Finance: 

  1. Awaiting the sale of one property in order to complete on another. 
  2. Requirement for a quick purchase – i.e a quick purchase is required / the property is for sale in an auction.
  3. Purchasing a property and refurbishing it so it can be tenanted an rented out / sold
  4. Using bridging funding as funding from a longer term lender is / will take too long. 
  5. The borrower’s intention is to only hold the property for a short period of time
 
 

If you are unsure as to whether or not bridging finance is the right option for you please feel free to contact us and we can advise you accordingly. Our telephone number is 0800 7723 180. Or alternatively email us at info@pitch4.com. 

 

Exclusions:

This site does not provide bridging finance on a property that you occupy for residential purposes or indeed PLAN to occupy. This is a regulated bridging loan and as such we would encourage you to approach a regulated mortgage advisor. If you would like help finding a regulated mortgage broker in this area please feel free to get in touch. 

A per calendar month basis for lending: 

Bridging lenders tend to lend on a per calendar month basis. This means that they may (often) charge you a rate per month for the bridging loan. In these instances you may be quoted a rate for example of 0.5% per calendar month. This is far more expensive than longer term funding typically as it is for shorter periods of time. Borrowers tend to borrow due to the speed that a bridging lender can complete a transaction as well as a flexibility in terms of repayment during the term of the bridging loan.  Bridging lenders may / may not charge early redemption penalties or exit fees, unlike longer term lenders who may have higher redemption penalties. 

If you find a solution for a bridging loan on our site or are just coming to us to see if you can better this please contact us now and we will make sure it is fully explained to you and the rate that you are being quoted is market leading. 

Interest payments:

Bridging lenders can often provide several methods to pay the monthly interest payments on the loan. Some bridging lenders will allow the servicing of the loan if there is clear evidence of affordability. This allows you to service the monthly payment until such a time that you can exit the facility and repay the loan. Other lenders can retain or roll up the interest on the loan so this is not a strain on your cash flow as a borrower. When discussing options with lenders please state which option is preferable for you. 

Property types for Bridging Finance:

Bridging finance can be used across a number of different property types. These include residential investment properties, commercial properties, and land and development sites. As with any purchase you can purchase the properties using bridging finance in a number of different vehicles. This can be as simple as a purchase in your personal name but also properties can be purchased in company structures as well. 

To ensure that you are making the right decision with regards to how you purchase a property and in what type of vehicle please feel free to contact us and we can put you in touch with relevant advisors who can give you specialist accounting and legal advice on things to consider from a tax and legal perspective. 

Exit is king! 

For bridging lenders it is key to explain how you are envisaging exiting their loan. If this isn’t via a sale of the property in question or another property it is important that you are aware of the options that are available for refinancing. If this isn’t something that you have investigated please feel free to reach out to a member of our team. 

Valuations:

Some bridging lenders will lend on open market valuations. Some lenders will lend off anything between the 90 day value or 180 day value. These different markers are very important to the amount of lending you potentially receive especially if you are looking at a high ( above 60%) loan to value (LTV). Please reach out to us and we can investigate which value a lender will base their loan on. 

We’re here to help:

If your deal has a number of complications we may feel that you would be best served by discussing this further with a mortgage advisor. We can also help you find one who will be able to help. Just give us a call or pop us an email and we will help you out every step of the way.  If you have received several offers on your enquiry and would like to run through these please feel free to give us a call. 

Please call us on 0800-7723-180 or email us at info@pitch4.com