At Barr Financial we are bridging loan brokers who help clients throughout the UK secure the best short term bridging loans for their projects. If you need help securing a bridging loan please get in touch:
What is a Bridging Loan?
A bridging loan typically involves lending on a short term basis. However there are options to have longer terms.
Short term bridging loans (as the name implies) is seen as a ‘bridge’ to allow the borrower time to arrange a longer term finance package or if an investment allows time to come to fruition.
The terms of the loan can vary dependent on the specifics of each individual case, but are generally along the following lines:
- First and second charge loans
- Interest rates from 0.75% to 1.5% per month
- Up to 75% LTV of Open Market Value - possibly more in certain cases
- No exit fees
- No upfront arrangement fees - interest can be retained and paid at end of term
If you would like to get an idea of the cost, why not try our Bridging Loan Calculator:
Fast Business Finance
Bridging finance has a wide range of applications. In most cases, you may need finance fast in order to move quickly and capitalise on a particular opportunity. Fast bridging finance can provide borrowers with access to capital much quicker than normal and with a minimum of red tape. However, the interest charges can be higher than other types of mortgages, but saying that it isn't as expensive as it used to be.
Unlike mainstream lenders, most bridging finance houses have a very streamlined and un-beauracratic lending process, which allows a loan to be processed in a very efficient manner. Perfect for people wanting to move quickly.
How do bridging loans differ from commercial mortgages?
Bridging finance differs slightly from a commercial mortgage in two key ways:
- Shorter term:
Bridging loans are meant only to ‘bridge’ the gap between you selling a property, or securing longer term finance once a project is completed. Therefore, they will typically only allow a maximum duration of 6-12 months before the money has to be repaid. However it is not uncommon to have a term of upto 5 years.
- Quicker application process:
Bridging loans can have a far quicker application process than a commercial mortgage - allowing you to take advantage of a property bargain.
Despite these key differences you should be aware that a bridging loan is still a mortgage in that it is secured on the property you are purchasing. That means that if you fail to keep up repayments on a bridging loan – the property could be repossessed.
The repossession process for a bridging loan can be much swifter than repossession on a regular commercial mortgage.
You should also note that bridging finance costs roughly the same amount to arrange as a commercial mortgage – and the finance you are receiving is going to be for a far shorter term. So only consider bridging if you will be unable to secure a commercial mortgage, or you expect to only need finance for a relatively short initial term (while you renovate a property to sell for instance).
For more information on bridging finance complete the form below and one of commercial team will be in touch alternatively, if you need to speak to someone urgently call 01237 472321 and ask for the commercial team: