What are bridging loans?
Bridging finance is usually a type of short-term business loan. It’s best thought of as a temporary loan which gets you from A to B, until you can either clear the loan in full or secure a more permanent form of finance. That’s where the “bridge” idea comes in – finance to get you from one step to another.
You could also use a bridging loan to purchase a property that needs development or is dilapidated. Depending on the condition of the property, a mainstream lender may not be willing to lend on it. Again, as above you could get a bridging loan to purchase the property in its current state, renovate it to a standard that is acceptable to a mainstream lender and then apply for mainstream funding in order to repay the bridging loan.
Bridging loan rates
Bridging loans by their very nature are a niche type of lending and as such the rates are usually/almost higher than that of a high street bank or building society. The interest is usually charged on a monthly basis.
While bridging lenders will have published rates, this can change depending on the individual circumstance of a case. The rate is of course always agreed upfront before any agreements are signed.
What details and documents are needed?
- Your Credit Profile
- Proof of ID and Address.
- A Valuation Report.
- Details of Your Exit Strategy.
- Property Experience.
- The Size of Your Deposit.
- Evidence of Income.