BridgingDevelopment FinanceLoansProperty FinanceSpecialist Finance

Ten times when bridging loans work

  • Development loan exit strategy
    The development loan is ending, the refurbishment has not been completed,
    or the property sale has yet to go through. The existing borrowing can be
    rolled into a bridging loan and could cover any additional unexpected material
    or labour costs.
  • Refinance an existing bridging loan.
    A developer or landlord may have an existing bridging loan that is about to
    expire. Some lenders will consider refinancing the loan to avoid expensive
    penalties and charges.
  • Buying a property at auction
    When buying a property at auction, a landlord, property developer, or investor
    has 28 days to complete the sale—failure to do so results in losing their
    deposit, typically 10% of the price. A bridging loan on the property is a quick
    way to beat the deadline. It can give the new owner 12 to 18 months to
    complete any refurbishment or sale before using their exit strategy.

  • Releasing equity in an investment property to cover additional refurb
    costs
    An unregulated bridging loan over multiple properties (including the one just
    purchased) can help finance an additional property to add to their portfolio.
    The loan can be rolled into a buy-to-let mortgage or paid off from the property
    sale proceeds.
  • Turning a property into an HMO
    When a landlord wants to turn a property into an HMO, he can seek a bridging
    loan to complete the sale or pay for the refurbishment. Upon completion of the
    work and rental of most rooms, this loan could be converted into a BTL
    mortgage.
  • Refurb of commercial or semi-commercial properties
    When refurbing an existing commercial office or shop with an upstairs flat, the
    developer can apply for a bridging loan to cover the redevelopment costs.
  • Purchase of an unmortgageable property
    Properties without a bathroom or kitchen or with aggressive invasive weeds
    (like certain kinds of bamboo) are considered unmortgageable. An
    unregulated bridging loan can cover the cost of purchasing the property,
    refurbishing it, or removing the weeds. This can then be rolled into a BTL or
    residential mortgage or paid off with the property sale proceeds, as long as
    that’s completed with the loan terms.

  • Pay an unexpected tax bill.
    A bridging loan can be used on property to pay an unexpected tax bill from
    HMRC. It can be converted into a second charge mortgage or paid off with
    the sale of other investments.
  • Purchase of new business premises or refurbishment of existing.
    If the business owner owns premises that the company may have outgrown or
    needs light refurbishment, a bridging loan could help cover the costs. The
    loan could be placed on the existing property for the refurbishment, the new
    building, or the existing building when the company is looking to upgrade the
    facility.

Bridging finance is a versatile tool that can be applied in many situations. This should
reassure you, especially if you have no or little experience with this sort of funding.