Bridging Loans
Fast, flexible short-term finance when you need it most
What is a Bridging Loan?
A bridging loan is a short-term financing solution designed to 'bridge' a gap between a financial need and a longer-term funding arrangement. These loans are secured against property and typically last from 1 to 24 months.
Bridging finance is characterized by:
- Quick access to capital, often within days rather than weeks
- Flexibility in terms and acceptance criteria
- Higher interest rates than traditional mortgages, reflecting their short-term nature
- Interest that can be 'rolled up' and paid at the end of the term
- Loans secured against residential, commercial, or mixed-use properties
At Commercial Mortgage Dealer, we specialize in arranging bridging finance for a wide range of purposes, helping you secure the funding you need quickly and efficiently.
When to Use Bridging Finance
Property Auction Purchases
When buying at auction, you typically need to complete within 28 days. Bridging loans can provide the fast funding needed to secure your purchase while arranging longer-term finance.
Breaking Property Chains
If you've found your ideal property but haven't yet sold your existing one, a bridging loan can help you secure the new purchase without waiting for your sale to complete.
Property Refurbishment
For properties that need significant renovation before they qualify for a traditional mortgage, bridging finance can fund both the purchase and the refurbishment costs.
Business Cash Flow
When your business needs immediate capital for time-sensitive opportunities or to resolve short-term cash flow issues while awaiting longer-term funding.
Unmortgageable Properties
For properties that don't meet standard mortgage criteria due to issues like non-standard construction or lack of facilities, bridging can provide funding until these issues are resolved.
Development Exit Finance
When a development is complete but sales are taking longer than anticipated, bridging can repay the development finance while you wait for property sales.
Types of Bridging Loans
Closed Bridging Loans
These are used when you have a definite exit strategy with a fixed date, such as a property sale that's already exchanged contracts. Closed bridges typically offer lower interest rates due to the reduced risk.
Open Bridging Loans
When your exit strategy is in place but the exact date is uncertain, such as a property that's on the market but hasn't yet sold. These typically have higher rates reflecting the additional uncertainty.
First Charge Bridging Loans
When the bridging loan is the only or primary finance secured against the property. These typically offer better rates and higher loan-to-value ratios.
Second Charge Bridging Loans
When there's already a mortgage or other finance secured against the property. These allow you to access additional funds without disturbing your existing arrangements.
Residential Bridging Loans
Secured against residential property, these are regulated by the Financial Conduct Authority when used for your own home.
Commercial Bridging Loans
Secured against commercial property such as offices, retail units, or industrial buildings. These are typically unregulated and offer more flexibility.
Key Features & Benefits
Rapid Funding
Access funds in as little as 7-14 days, perfect for time-sensitive opportunities.
Flexible Criteria
Less stringent requirements than traditional mortgages, with focus on the security and exit strategy.
Serviced or Rolled-Up Interest
Option to pay monthly or roll up interest to be paid at the end of the term.
High Loan-to-Value
Borrow up to 75% of the property value, with some lenders offering even higher in specific circumstances.
Short-Term Commitment
Loans typically range from 1 to 24 months, providing the flexibility you need without long-term obligations.
No Early Repayment Charges
Many bridging loans allow early repayment without penalties, giving you maximum flexibility.
Frequently Asked Questions
How quickly can I get a bridging loan?
With the right documentation and a straightforward case, bridging finance can be arranged in as little as 7-14 days. More complex cases may take longer, but still significantly faster than traditional mortgages.
What are the interest rates on bridging loans?
Rates typically range from 0.5% to 1.5% per month, depending on factors such as the loan-to-value ratio, property type, and your exit strategy. This equates to approximately 6-18% per annum, reflecting the short-term nature of the finance.
What is a valid exit strategy?
An exit strategy is your plan for repaying the bridging loan. Common exit strategies include the sale of the property, refinancing to a longer-term mortgage, or funds from another source such as an investment maturing. Lenders will assess the viability of your exit strategy as part of the application process.
Can I get a bridging loan with bad credit?
Yes, it's possible. Bridging lenders are generally more concerned with the security (the property) and your exit strategy than your credit history. However, adverse credit may affect the rates offered or the maximum loan-to-value available.
Need Fast, Flexible Finance?
Our specialist bridging loan brokers can help you secure the funding you need quickly.