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What is bridging finance

With the raise of instant loan specialists and the ability to achieve a bank loan in almost an instance, bridging finance is no longer as popular as it once was. Bridging finance always provided the borrower with access to quick funds with the minimum of fuss, making it a popular funding option.

Bridging finance is always secured, either against a residential or commercial property, depending on what you are buying or selling. A first or even second charge will be levied on the property as assurance the loan is paid back in full. People who may purchase old property from auctions benefit highly from using bridging finance as it allows them to buy the property in question and then organise a mortgage to pay for it. Most companies specialising in this type of finance will consider lending you up to 75% of the property's value. You then clear the bridging loan once you have an ordinary mortgage or bank loan in place.

Bridging finance was, at one time, rarely used outside of purchasing commercial properties. Today, this type of finance is used for many legitimate reasons, such as investments, residential properties and equity releases. Interest rates are usually charged on a monthly basis and can start at as little as 0%. The interest rate does depend on how much of a bridging loan you have taken out and what type of collateral you secured against it. Non-status bridging finance is different, as the lender usually finances a business plan as oppose to the purchase of a property or investment.

 

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