August 15, 2022

What is Bridging Finance?

 Bridging finance is a solution to short-term funding requirements. Think of a bridging loan as a bridge for a temporary gap in short-term finances. You can use a bridging loan to pay for something new while you wait for another sale to complete. For example, bridging finance is the perfect solution when you want to buy a new house and are waiting for the sale of your old property.

Is a Bridging Loan Right for You?

Bridging loans tend to work on a per calendar month basis with a flat rate per month. The longer the loan remains unsettled, the more expensive it is when compared to the alternative, longer-term funding.

Additional Considerations

  •  Bridging lenders often provide several methods to pay the monthly interest payments. Some will agree to retain, or roll up the interest, while others will allow the loan to be serviced with clear evidence of affordability.
  • Bridging loans cover a wide range of properties, including residential investment, commercial, land, and development.
  • Bridging finance can be used to purchase in a number of different vehicles, from personal name to company structures
  • Bridging lenders will want a clear understanding of how the loan will be exited. Whether that’s from a future sale, or from other means.
  • Valuation is key. The loan to value (LTV) amount is pivotal to determine how much lending potential is available.

Whether or not you know Bridging Finance is right for you, Provide can help you go over all of your borrowing options. If you’re ready to proceed with an application for a bridging loan, our team of financial experts will work with you to provide the LTV amount, exit plans, and other crucial documents potential lenders will want to see.

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