Bridging Finance is primarily seen as a property related bit of finance
because it can be used to secure against property. That is one of the
easiest ways of getting it, just on the basis that property gives the
bridging lender a relatively understandable exit – in terms of how they
are going to be repaid.
Bridging Finance can be used for business purposes as well. If you have
a shortfall of cash but you know that you have got cash coming in in the
future.Bridging loans are typically six to twelve months, though they
can go up to twenty-four months, so it can be used for different
purposes, if there is an exit strategy.
Now, the one thing to bear in mind with Bridging Finance is that whilst it
primarily doesn’t need to be serviced, so you don’t need to make payments
against it, what happens is that the interest that is building up is that
it gets added up and then taken away from the original loan value that you
What this means is that your day-one draw down is actually less than the
value of the loan, to the tune of the fees and the interest, so you really
need to bear that in mind when you are arranging your finance.
The original main loan value will be based on the loan-to-value, but the actual
amount of money that you will have in your pocket will be different to that,
unless you can prove through your income that you are able to service the
interest on a monthly basis, which then releases all of that interest from
the loan into your day-one draw down. This allows you more money upfront,
but you must make a monthly payment. The lender will require proof of how
you are going to do that.
There are still lots lenders out there, and more lenders are coming into the
market. Coronavirus has had a little bit of an impact, in terms of some lenders
have withdrawn from the market, but there are still plenty out there.
If Bridging Finance is something you are looking for, or considering, then
it is still very much on the table. If you need Bridging Finance or want to
discuss your options, fill out the contact us form on this website and we will
be in touch.