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Bridging Loans

Bridging Finance Explained

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ridging loans are a short-term funding solution originally designed to 'bridge' a gap between a requirement coming due and the main line of funding occurring, it also act as a short-term loan in pressing circumstances thus providing the opportunity to make your projects or dreams happen. In recent years Bridging has evolved for many uses including financing auction purchases, refurbishment projects, development, non-status and even un-mortgagable properties. They can be invaluable in facilitating a property purchase that otherwise would not be possible. But as you might expect with a stop-gap measure, they can be much more expensive than a 'normal' loan.

What is a bridging loan and how do they work?

As well as helping home-movers when there is a gap between the sale and completion dates in a chain, this type of loan can also help someone planning to sell-on quickly after renovating a house, or help someone buying at auction. Bath and West Finance are a non regulated lender therefore in simple terms a regulated mortgage contract is a loan secured by a charge over a residential property which is lived in by the client, a family member or other close person and the purpose of the loan is not wholly or predominantly for the purposes of a business carried on, or intended to be carried on, by the client are unable to transact property transactions where it is a first charge.

As banks and building societies have grown more reluctant to lend, there has been an influx of bridging lenders into the market. Rates can be high and there can be various administration fees on top, potential borrowers are advised that these contracts should be viewed as short term and a viable exit or exit strategy will need to be in place.

Bath and West offer loans ranging from £50,000 – £2,000,000
over a term of 1 to 18 months.

Who are bridging loans aimed at?

Generally speaking, bridging loans are aimed at landlords and property developers, including those purchasing at auction where a mortgage is needed quickly. They may also be offered to wealthy or asset-rich borrowers who want straightforward lending on residential properties.

Who are bridging loans aimed at?

Bridging loans can be used for a variety of reasons, including auction purchases, property investment, buy-to-let and development. More recently, there has been a growing trend among borrowers to use bridging loans due to high street and private banks taking longer to process applications for larger home loans.

Some borrowers are also viewing bridging loans, even though slightly more expensive as a simple viable alternative to mainstream lending due to the ability speed and flexibility.

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