What is Bridging Finance

Tim Meakin

What is Bridging Finance

The present economic climate and the increasing availability of bridging loans are making bridging finance a more appealing option for many businesses and investors. While it used to be a specialist product, it is now increasingly being used in numerous investments that are being made across the country. More and more borrowers are seeing the benefits of applying for this short-term loan and using it as a means to push through their businesses and their property transactions.

It is quite popular for a number of purposes. These days, they are being used as a financial support for residential and commercial property transactions. It can also be used to support development and renovation projects as well as auction purchases. There are also businesses that are taking out this particular funding option especially in instances where a quick cash injection is required.

The growing confidence that the public has in the housing market may have helped the bridging market gain the necessary momentum that it is presently enjoying. Development initiatives and building investments, along with buy-to-let setups have significantly increased the present demand for bridging loans. This gives investors more opportunity to help refurbish and renovate a property that is not possible to be financed by the usual standard mortgage.

What is a bridging loan

The loan is a short-term setup that usually lasts to twelve months or less which can be used by both businesses and individuals for whatever purpose until such time as they are able to secure permanent funding, sell their property, or when the next stage of their financing will finally become available. It is fast, secured, and flexible and it helps borrowers get the fast cash injection that they need especially in instances where financial funding cannot be secured somewhere else within a specific set of time.

Different types

Closed bridge is one where the borrower is given a specific date when to get the loan repaid. This is especially prevalent in people selling a property where the completion date has been set ahead of time. Once the property is sold, then the bridging loan has to be repaid.

Open bridge is where the borrower will propose a specific exit plan on how the loan will be repaid. There is no specific date that is set but there is going to be a clear-cut condition though that it has to be repaid. Most of the bridging loans issued these days are often open ones.

Getting to know its uses

The loan can be used for both residential and commercial property transactions. This can be beneficial to barn converters, home builders, home buyers, property developers, landlords, as well as investors. You can be building, buying, or refurbishing a property. This short-term loan can be most useful to get some much-needed additional funds

How it works

Mainly, the time it takes for the loan to get processed is where a bridging loan differs greatly from a regular mortgage. Bridging finance takes a shorter time to get approved, which makes it ideal for people that need the funds fast.

Learn more about bridging finance by reading about Tim Meakin from Toton online.