What is bridge financing?
Bridging finance is short-term funding, secured against property (or land) until a long-term finance arrangement can be agreed on. Alternatively, it lasts until the property (land) is sold in order to repay the loan. It is so-named due to the way the loan works as a bridge between two funding options.
Remember that bridging loans are temporary and should be used during the interim period between two permanent loan options. As such, bridging finance can be very useful in a variety of different situations.
When to seek out bridging finance?
Bridging finance is a particularly viable option for borrowers looking to get approved for their loan quickly. As these loans are secured loans which tend to be offered privately, potential borrowers are likely to receive approval far quicker than they would when seeking a loan through a traditional bank.
Bridging finance can be used in a number of circumstances including:
- Residential and commercial property development
- Purchase and discounted purchase of a property (below the market value)
- Conversion and refurbishment of a property
- Chain breaking
- Auction property
- Land acquisition
- Capital raising for business
- Avoiding bankruptcy
How does bridging finance work?
The benefits of bridging finance
As we have mentioned, one of the primary benefits of acquiring a bridging loan is the fast approval time that they offer in comparison to other loans. These loans are guaranteed by being secured against a property or land and are usually only taken out for a short time, meaning that borrowers rarely face issues when seeking approval.
Despite the ease and speed at which these loans may be approved, bridging loans are not always small. In fact, many lenders will be happy to offer bridge financing for up to 80% of the collateral property’s value.
IMC Bridging Finance services are provided through our introductory agreement with AJP Finance Ltd. and are regulated by the FCA. If you are interested in more information regarding our bridging finance services, please get in touch with our team.
