How to Find the Right Bridging Loan for Your Needs

Bridging finance can be hugely flexible, but no bridging loan is a one-size-fits-all solution. There are various different types of bridging loans available, each with its own unique features, properties and intended applications.

Narrowing down the options available means considering how you intend to allocate the funds. Bridging loans can be tailored to suit individual borrower requirements, though in most instances fall within one of the following categories:

Standard Bridging Loans

A standard bridging loan can be taken out to cover any temporary financial ‘gap’ at short notice. Bridging loans are usually available from £50,000 to £10,000,000, which can be made accessible within a matter of days. Monthly interest rates can be as low as 0.5%, with LTVs available up to 80% or more. A standard bridging loan will almost always be secured against a qualifying property, which can be residential, commercial or mixed use.

Auction Finance

This is a specialist type of bridging loan used specifically to purchase a property at auction. As auction property purchases are usually time-critical, every effort is made to underwrite and issue the loan as quickly as possible. It is also highly advisable to seek approval prior to the auction itself, in order to ensure you are eligible for the loan you need. Auction finance can be taken out from £50,000 to £10,000,000 with a monthly rate of interest of around 0.5%.

Property Purchase

Bridging loans can be used to purchase all types of properties both by everyday homeowners and investors. As a bridging loan can be arranged within a matter of days, it can serve as a lifeline when looking to avoid any potential chain-break situation or delays. For example, a homeowner looking to relocate could purchase their new home with a bridging loan and then repay the loan in full when their previous home is sold. As interest is charged on a monthly basis, prompt repayment ensures the lowest possible borrowing costs.

Light Refurb Loans

This is a particularly useful facility for investment properties, which prior to being sold or let out need minor to moderate refurbishments. Light refurb loans can be secured against the property itself and used to perform any required improvements or modifications. They can also be used for all types of residential, commercial, and semi-commercial property refurbishments, issued in sums between £50,000 and £10,000,000.

Property Conversion Loans

Major structural changes and improvements can also be funded with bridging finance in the same way. Depending on the lender you work with, it may be possible to cover up to 100% of the costs of the project with a specialist bridging loan.

Business Funding

Small and large businesses facing the occasional cash flow issue can use commercial bridging finance as a temporary solution. Typical applications include paying unexpected tax bills, covering staff wages as an alternative to invoice financing, paying for urgent refurbishments, covering equipment purchase costs and more.

Second Charge Bridging Loans

A second charge bridging loan can be issued against any residential, commercial and semi-commercial property that already has a mortgage secured on it. This can be a great way of raising funds for any purpose and is a facility open to everyday borrowers and commercial customers alike.