Bridging finance

The objective of bridging finance is to quickly provide the short-term lending finance to acquire a property, later you can then remortgage it when it has been made suitable for mortgaging purposes, or simply sell on for a profit.

The use of bridging finance is more expensive in terms of both fees and interest payable and this finance is only intended and agreed to be loaned on a short term basis. This is typically six to twelve months and a maximum of two years. After this time, the full loan capital will need to be repaid.

If you have found a good property deal and can’t finance it any other way, bridging finance would at least mean you could take advantage of the deal you have found rather than let it pass you by. In fact, this financing only works well for very good property deals that are being sold at a price such as to leave a significant opportunity for uplift in value. In this case, the additional costs of the finance can be easily covered by the uplift in value itself.

The amount of the loan is solely focussed around value of the property rather than income, as there won’t be any rental income with an uninhabitable property. LTVs of up to 70% are possible although sometimes less than this depending on the lender.

More details on this are contained in the book. See the linking below to access recommended training and advice in this area.