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.
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.
Some examples of how Bridging Finance can be utilise include:
- Quick access to Funds
- Purchase a new property before the old one sells
- Pay an unexpected bill
- Genuine Development Cases n Property Requires Work (Refurbishment and Conversion)
- Revolving Credit Line
- Bridge to Let/Occupy
- Release equity in an existing asset
- Discounted Purchase Price
- Leasehold extensions
- VAT Bridging Loan
- 2nd / 3rd Charge Security
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.