Like a new suspension bridge connecting opposing river banks, property bridging finance can be a fast and timely way to help property developers get from A to B. Unlike development finance at the start of a project or a mortgage, a property bridging loan allows quick access to much needed capital that unlocks a whole raft of avenues in order to move your business forward.
Property developers that are looking to purchase that next site whilst still selling their latest project or needing to refurb a property that traditional lenders won’t consider are just two examples, but if these are pain points you’ve experienced, then bridging finance could be the strategic finance solution you need.
Bridging finance is as it sounds a short term loan secured on a property; but unlike a mortgage the financing can be arranged in a matter of days and the term is much shorter whilst the next stage of financing becomes available to the developer – usually anywhere from 1 day to 24 months.
Why use it?
There are many reasons why bridging finance might be the best solution, but typically this could include:
• Refinance / pay off a previous funding requirement that is due and pave a new two year runway
• Quickly purchase a new site whilst waiting for the sale proceeds of an existing development (sometimes timing is everything!)
• Refurbish an existing property
• Build on an existing site in order to realise long term value
How much does it cost?
As you might expect, the convenience and speed of bridging finance means that lenders will typically charge a premium over say a 30 year mortgage, but if the equation works it can be by far the best solution because of the fast time frame it takes to arrange and what this unlocks for you – bridging loans could be completed and funds released in as little as 48 hours.
The interest rate charged will therefore vary depending on the prevailing market rates and the security type as well as some other things you need to consider:
• Loan to value ratio (up to 85%)
• Term length (from 1 day to 24 months)
• Loan amount (typically £100k – £50m)
The underwriting and legal aspect isn’t too dissimilar to a mortgage, and therefore it pays to have a strong broker on board that has the relationships with the lenders and can manage your case not only efficiently but in a timely manner – ensuring a speedy approval and release of cash that lets you do what you need to do.
A smooth process requires a quality application that not only details the reasons for the loan but a clear strategy of repayment and necessary back up documents. Done properly this will trigger a quick decision in principle from the lender – sometimes within a day (subject to a valuation report), before finalising and successfully releasing funds to you.
Bridging Loans can be a valuable tool for property developers that need to move quickly when you need fast cash – by choice or due to the market; and having a good team around you is critical to obtain that success. With over 25 years’ experience and strong relationships in the lender market, the team at Kingswood is here to help. We are fully regulated by the FCA and pride ourselves on going the extra mile for our clients. Get in touch with us today to find out how we can help. For additional information, please click the link below for our dedicated ‘bridging finance solutions’ page. Alternatively, get in touch today via our contact form and set up a free, no obligation consultation.
If you would like to speak to us about funding options for your project, contact us today.
If you would like to talk to a member of our team about project funding, please contact us today.
We are a specialist property finance debt arrangement firm based in the heart of London. Our commercial team facilitate investment and construction funding for real estate investors and developers.
£1,245,782 to date since 2015.
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