Guide 101 – Bridging Loan Explained

Guide 101 – Bridging Loan Explained

Imagine you have found the perfect commercial building or land in a prime location of the UK that just needs a face-lift to justify its rent increase or value. With so many options available, it can be challenging to know which financial product will offer the best benefits to you. One commercial product that is popular among developers and has made acquisition easier is ‘Bridging loan.’ Depending upon what you need, when you need and what you need it for, you may find a bridging loan to be a uniquely affordable service. 

In this simple guide, we explain what a bridging loan in the UK is, how it works, and why you should use it.

Bridging Loan from A to Z

Wondering what is a bridging loan known for in the UK? 

It is a short-term, flexible form of lending, typically lasting up to twelve months, which is designed to fill the gap between money coming in and time pressured transactions. In simple words, a bridging loan is used when you pay for something new while waiting for the funds to become available from the sale of other resources. A bridging loan is often used by developers/investors who buy property or land to benefit from planning gain, fill the gap till a long term finance product is completed or waiting for a development loan..

 After having a brief understanding of what a bridging loans is in the UK, let’s move forward to how it works?

You can borrow between 50,000 to 10 million pounds with a bridging loan. The amount solely depends upon how much equity you have available. The maximum LTV is limited to 75%in most cases. Other than this;

  • You can instantly borrow the money to keep your property transaction on track. 
  • You can borrow a large amount of money and,

Reasons Why You Should Use Bridging Loan

Funding purchase of new property – you may find yourself in a situation where you are purchasing new land or property with the funds generated from another property sale, but the sale is not completed. This short term loan works brilliantly in such scenarios and bridges the gap that allows you to purchase a new property without waiting. 

Purchasing property at auction – you secured the winning bid on auction property. What now? You have to pay some amount on a day, with the rest of the purchase bid required for payment soon after. This can cause a problem for many, as a standard mortgage can take more than 60 days in some scenarios. In such cases, a bridging loan proves useful and allows you to complete the property purchase within the required time frame.

Purchasing a commercial property – in order to be a successful investor in the highly competitive market of the UK, it is no secret that you need to act quickly on a new opportunity when it presents itself. Investors looking to buy commercial property need quick access to funds. Often, this can be difficult as capital may be tied up in other assets. For such scenarios, a bridging loan is a viable option. 

No matter how tricky your case is, our understanding of the bridging market will guarantee we provide you with the best solutions to suit your circumstances. Get in touch with us today, and we will connect you with one of our best bridging loan specialists who will guide you throughout the process.

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