Bridge Finance
Overview
Bridging finance or bridging loans are short-term, high value loans that are secured against either a commercial or residential property. They are often referred to as “short-term funding” – typically the term of a bridging loan is one year.
The most common use of bridging finance is to break a chain in order to make a competitive offer and complete quickly on a property purchase without having to sell your own property. Often this type of funding is used in an emergency situation where a buyer pulls out at the last minute leaving you the option of having to postpone or cancel your property purchase. It’s also common for homeowners in a slow market to use bridging finance to become “cash buyers” and thus get a better deal on a property purchase.
The biggest advantages of bridging finance over other types of loan are the speed in which funds can be made available – often in less than a week. And with little or no red tape or credit checks in place it’s an ideal way for those with poor credit history to borrow money in the short term when other lenders may refuse credit.
The speed at which bridging finance can be arranged also makes it attractive for investors – buying at auction, for example, or when a property can be bought, refurbished and sold within a short period.
Bridge Financing Process
