What is Bridging Finance?
Our Bridging Loans are secured against UK property or land assets and are normally required quickly, for a relatively short period of time (between 1 and 12 months) and mostly when other more traditional financial methods, such as a mortgage, are not available to the borrower at that time.
Bridging Loans are secured by way of a formal Land Registry charge in the same manner as most high street funded mortgages or loans. This charge prevents the security being sold or refinanced without repayment of the loan.
The borrower receives the net loan required and unlike a mortgage doesn’t normally make monthly payments. The loan is designed to be repaid in one payment on or before the agreed term, including all interest generated.
A formal timeframe and exit route such as sale or refinance is agreed with the borrower prior to commencement of the loan.
Examples of why individuals or companies use Bridging Finance:
- Age – the applicant could be too old to obtain a standard high street mortgage as most mortgage lenders now prevent borrowing into what is deemed, “normal retirement age”.
- Property condition – the property may be in a condition where it is not suitable for mortgage finance and as such a Bridging Loan could be used to complete the purchase and any required work prior to refinancing.
- Credit – the applicant may have some adverse credit, however minor, which was previously acceptable to lenders but now no longer fits the high street lending criteria.
- Income – the applicant may have difficulty proving income requirements needed for more regular finance. This may be due to poor self-employment records, a break from work or a reduction in self-employed workloads or overtime. As Bridging Finance does not require monthly payments, affordability on this basis is of less importance to us.