A quick guide to Bridging Finance and Loans
Business finance, also commonly referred to as bridging loan, is a fast way of raising interest only finance for a variety of uses. The finance facility is normally used for property purchases and the bridging loan is normally secured on property, or land, which may be commercial or residential.
Unlike mortgages and loans, bridging finance lenders will normally lend to people on a non status basis. This is because the security of a property or land is enough for the lenders and they will normally lend up to 75% loan to value on a first charge basis or 65% on a second charge. The amount given is based on the true value of the property.
Additional amounts of up to 100% can be borrowed if additional security is given. The amounts that can borrowed range from anything from £25K to £5 Million plus.
The terms of the bridging loans vary I accordance with the requirements. A typical borrowing lasts a few months and can go up to as much as 12 months.
The finance can be made available quickly by a lender, and it is not uncommon for a borrower to obtain funding in as quick as 48 hours.
The repayment of the loan is normally arranged by the sale of the purchased Investment Property or with the arrangement of a mortgage to pay off the loan. Bridging loans are more expensive than mortgages and it is advised that they are cleared as soon as possible.
Only a few principal lenders lend bridging finance. You can visit the Bridging finance site to submit an application.