Development and Refurbishment – 90% Loan to all Costs available – Terms available for Professional Developers & First-time Builders
Commercial Mortgages – Up to 82% LTV (100% in specific cases) Rates starting at 1.90% + BR Terms up to 30 years with Interest Only Options
Bridging and Short-term Finance – Short-term from 0.42% pcm (min 24 months) – Bridging Rates available from 0.43% pcm – Available for Auction Purchases

Bridging & Short-term Finance

Bridging & Short-term Finance

There is sometimes confusion across the terms ‘Bridging’ and ‘Short Term Finance’ which in reality are essentially the same thing i.e. funding designed to get a borrower from where they are now to where they want to be in a short space of time.

Bridging was originally a funding product designed for people who wanted to buy a new residence before their old one was sold – therefore a financial bridge between those two transactions.

This has evolved over the years, the above scenario is still a common one for which bridging is used, but the term now extends to all types of funding where either a quicker than usual funding line is needed against a property or something needs to happen to the property before it can be sold or mortgaged through traditional longer term finance.

For people who want to buy a new residence before their old one is sold – therefore a financial bridge between those two transactions. This can be secured only against the property being sold or against both the existing and the new properties depending on various factors.

Usually where a quick purchase is vital such as auction purchase, or that once-in-a-lifetime business opportunity, this allows purchases to complete in a much shorter timeframe than traditional funding, and can often be measured in days rather than weeks or months.

More clients are taking advantage of opportunities to add-value and make their money work harder through refurbishment schemes compared to more historic vanilla investment strategies.

This sector includes a vast array of differing funding criteria and lenders, whose offerings vary greatly subject to client and project specific parameters.

Clients without any previous experience are benefiting from access to debt structured solely against the existing value of a property, funding the works themselves before refinancing against the end value. More complex, labour intensive and Heavy Refurbishment projects structured across multi tranched facilities where elements of the original site are retained.

This type of funding has traditionally been the domain of ‘true’ development lenders but is now increasingly available from short term lenders who can often be more nimble where timescales are tight on a purchase.

The lines have become blurred in recent time between short and medium term funding with some traditional short term funders extending maximum loan terms out to 3 or even 5 years in some cases.

This ahs been accompanied by some creative offerings were for example rental shortfall on residential property is overcome by a full or part interest retention to cover the difference between the rent and the interest payments for a period, or even deferred interest periods allowing the rental to cover the repayments where it would otherwise not have done.

This has been approached from the other direction as well, with some traditional loan funders offering facilities over a much shorter term, some as little as 2 years, without a premium being applied to the rate which is charged at their standard pricing.

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