Summary:
The secret of commercial bridging finance is finding quick solutions for development funding. The bridging finance market is specialised and there are a number of major lenders and many minor players. You can find these directly or be introduced by a broker, who is more likely to be aware of the nature of the lender, especially whether they will perform to your timetable.
Bridging loans and short term finance at a commercial level may be commonly used for one of the following:
- Buying property at auction
- Raising working capital for a business in the short term
- Breaking mortgage chains
Bridging finance will be used by both occasional speculators who spot opportunities and by experienced developers and companies who use them as a regular part of their funding approach.
By their nature, bridging loans are short term with terms ranging from just a few weeks to months or sometimes longer. Sometimes bridging loans can be the initial quick solution but developers know they want to find a longer term solution for more than a year. As speed is often the key factor in a bridging loan, there may not be time to negotiate terms for a longer period and this is where a broker may come in useful. The broker will know lenders who may be flexible in this respect and this will ensure there are not expensive double fees.
Finance will not usually be available for more than 55 – 65% of the LTV, but higher figures are possible if additional security is granted. The best lenders can be known to approve and complete a loan within 24 hours.
