Business financing simplified
in a nutshell
Bridging loans are short-term secured loans, traditionally associated with ‘bridging the gap’ between buying a new property and selling an old one. They are often used by property developers to bridge the gap between the purchase of a property and organising longer-term finance like a mortgage.
Bridging loans are often used in tandem with development finance. Either to help purchase the property, or as an exit strategy when a project is completed, whilst longer-term finance is organised.
Sometimes, a bridge can be used for business purposes, as a quick and cheap alternative to an unsecured loan. Bridging loans are renowned for speed and flexibility and can sit behind a traditional mortgage either as a second charge or sometimes third.
Typically, lenders will lend up to 70% of the value of the property, either 1st, 2nd or 3rd charge. You as a borrower will have to pay for the valuation (although some lenders do desk-top valuations for easier, more time-sensitive deals) and lawyer fees of the lender. As long as the valuation report matches your expectation of the property’s value, and the lawyers find nothing untoward, lending should be released quickly.