Bridging loans

Buying Property

Bridging loans can provide you with the funds to secure property before selling your existing home or raising the money elsewhere. This is ideal for buyers who need to act quickly in a competitive property market.

Auction Purchases

When buying property at an auction, a bridging loan could be a fast and effective solution to cover the purchase price until you arrange permanent financing or liquidate other assets. Auctions typically have tight payment deadlines and bridging loans can help you complete the transaction.

Property Development

For property developers needing short-term finance to fund renovations, conversions, or new builds, bridging loans offer a flexible solution. They provide the capital required to get projects off the ground while you secure long-term funds or sell completed units.

Tax Payments

If you have an outstanding tax bill and need time to arrange the funds, a bridging loan can cover the immediate expense. This temporary finance allows you to meet tax obligations on time while you arrange more permanent funds.

Capital Raising

Bridging loans may be used to raise capital quickly for various purposes, such as business investment or personal needs. They offer a short-term solution while you arrange for long-term financing or await salary payment, asset sales or dividends.

Cash Flow

For people or businesses experiencing temporary cash flow issues, bridging loans offer a quick injection of funds. They can help you to manage expenses and maintain operations while waiting for receivables or other sources of income.

Chain Break Finance

In property transactions where a sale depends on the purchase of another property, a bridging loan could help break the chain. It provides immediate funds to secure a new home, allowing you to sell your current property on your own timeline.

Expansion Plans

If you're planning to expand your business or invest in new opportunities but need immediate capital, a bridging loan offers short-term financing to cover the costs until more permanent funding is secured.

Property Investment

Investors looking to acquire properties quickly or fund improvements might use bridging loans. These loans provide the fast, flexible financing needed to capitalise on investment opportunities before arranging longer-term finance.

Refinancing Bridging Loan

If you have a bridging loan that's nearing the end of its term, you can take out a replacement bridging loan to pay it off. This can be helpful if you're not ready to exit through the sale and don't yet have a longer-term financing solution.

Advantages of a bridging loan

• Quick access to funds: One of the key benefits of bridging loans is that they can be arranged quickly, often within a few days. This could be crucial if you're looking to meet pressing tax or property deadlines.
• Flexible terms: With open bridging loans, lenders will often consider your full circumstances and offer a range of terms for paying back the loan. They're typically underwritten manually by someone with a real-world understanding of the property market.
• Helps to secure property: The property market is well-known for being competitive and fast-moving. A bridging loan could help you move fast and help you access to unmortgageable properties that turn into great investments.  
• Larger loan amounts: With a sound exit strategy, good equity and a healthy credit score, bridging loan lenders may be willing to offer large loan amounts for your property purchase or investment, in some cases up to £25M.

Disadvantages of a bridging loan

• Higher interest rates: This fast and flexible form of financing is offset by the lender with higher rates of interest. Interest is charged monthly, which might work out much more expensive than a typical secured loan or personal loan.
• Risk of repossession: If you fail to repay your bridging loan, you're at risk of losing the property you used as equity. This applies to all secured loans, but the repayment deadline with a bridging loan is often much shorter.
• Additional fees: As well as carrying a higher rate of interest, bridging loans sometimes come with arrangement fees, legal fees, valuation fees, admin fees and exit fees (for paying your loan off early).
• Higher tax: Buying a new residential property before you've sold the first may help you break the property chain, but HMRC will treat it as a second home and levy more Stamp Duty Land Tax (STLD).