What is a Bridging Loan and what can it be used for?

    • Purchasing a property at auction

    • Securing a residential site for the future works or development

    • Raising capital for future projects

    • Funding small refurbishment projects for investment properties before they are made available for rent

      A Bridging Loan, or Bridging Finance, is a short-term loan that finances the purchase or construction of a new property while you are selling your existing property. Bridging finance is popular with landlords and property developers who need to fund property development projects which they will sell off quickly afterwards.
      Typical purposes include:

    How do you get a bridging loan?

    Bridging Loans are not typically provided by high-street banks, so you should approach specialist lenders. They will know the market and understand your short-term funding needs.

    How quickly can I get a bridging loan?

    Bridging loans can be completed much more quickly than traditional mortgages. They have been known to complete in 3 days if the deal is simple. If, for example, you were to purchase a property at auction, could provide a strong exit plan to your lender and make sure your valuer and solicitors are also well informed and can respond promptly.

    How much can I borrow on a bridging loan?

    Maximum loan sizes for bridging loans are set by lenders, an example being between £200k and £2m. The amount you can borrow will be dependent on the valuation report and the amount you can put forward as a deposit if it’s for a purchase.

    Can you get 100% bridging loans?

    No. The nature of bridging loans used for property funding means there is already a greater risk that lenders must mitigate. However, if you are refurbishing or converting a property to increase its value, you can quite often apply for 100% of the development costs as well as a contribution to the property’s purchase price.