Understanding Bridging Finance
Bridging Loans are a flexible form of short-term, stop-gap finance used to purchase residential or commercial property, either for owner-occupation, or for investment purposes. Where a property sale has fallen through or funds are needed to carry out refurbishment work before selling or re-financing onto a long-term loan, bridging finance can be an ideal solution to help make things happen.
What are the uses of bridging finance?
Property Chain Breaks
Bridging Finance can come to the rescue where the sale of the customer's property has fallen through, and the equity tied up in their property is no longer available to allow the purchase of the new property to go ahead. A bridging loan can step in for the locked-up funds and allow the purchase of the new property to happen. Their existing property would remain on the market until it is sold and allow the bridging loan to be repaid.
Refurbishments and Conversions
Bridging Finance, for the purpose of buying and raising capital to convert or refurbish a property, is raised frequently by property investors wanting to purchase investment or commercial property. Funds can be raised for the purchase and, sometimes, towards the cost of refurbishment or conversion. Refurbishment bridging loans are used to improve the structure and interior of properties to increase the property's value to either sell or, rent out using a long term buy to let mortgage which, when completed, will repay the bridging loan.
Auction Property Purchases
Buying homes at auction is a common practice for many property investors and bargain-hunting, residential owners looking for the type of property they really need. As auction purchases often require the buyer to exchange contracts typically within 28 days, the quickest and most flexible form of finance that can be arranged to secure the property, is a bridging loan. It's often wise for investors and residential purchasers to consult with bridging finance experts, like Try Financial, before they attend the auction so that a bridging loan can be agreed in principle and the buyer can be confident of how much they can bid for during the auction itself.
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*This information is intended as a general guide only and should not be considered as a recommendation or advice regarding the suitability of any particular bridging option for your situation. All options are subject to the applicant(s) meeting the specific eligibility criteria of the lender. We recommend scheduling an appointment for personalised bridging advice tailored to your individual needs and circumstances.
