Find out how to get a bridging mortgage provide

Stay dry: A bridging loan can protect your cash flow

If you need a short term business loan to get your business from A to B, bridging finance might be for you. Use Funding Options’ bridging finance calculator to find out how much you can potentially borrow in the form of a bridging loan. We will ask you for some basic information such as how much you want to borrow, when you will need the funds, what the financing is for (e.g. “Real Estate Financing”) and your email address so that we can make your bridging loan offer to you .

Some business owners are unaware of the benefits of bridging finance, while others are not sure what it is actually for. Read on to find out more about this unique type of corporate finance.

> See also: Common use for bridging loans

What is a bridging loan?

Bridging loans are intended to close a funding gap. Bridging loans are often quicker to obtain than term loans. In some cases, funding can be completed within 24 to 48 hours. There are two main types: closed and open.

Closed bridging loans have a fixed repayment date (within a few months), while open bridging loans have no fixed repayment date. However, lenders typically expect repayment within a year.

As this is a short-term financing solution, bridging loans are valued monthly rather than annually. The interest rates are usually quite high – you can pay anywhere from 0.5 to 1.5 percent per month in fees. The arrangement and administration fees depend on the lender.

What can I use bridging finance for?

Bridging finance is typically used by buyers and developers of commercial or residential real estate. They are often used to fill a funding gap while a current property is being sold, and sometimes they are used to pay tax bills. Bridging loans can also be used to finance renovations – from basic developments to minor renovations and other short term business purposes.

Whatever your reason for needing funding, you must have a clear exit strategy in place and it will depend on the lender’s appetite for your plans. Bridging loans are also used to purchase:

  • A property at auction
  • Land for development
  • Property that is “uninhabitable”
  • camp
  • Machines or devices

Can a bridging loan be extended?

Some lenders may consider bridging loan renewal applications, and those who do will likely consider each application on a case-by-case basis. You can also hire an outside appraiser to reevaluate the property before making a decision. An open bridging loan may be a more suitable option for your needs if you don’t have an end date in mind.

The borrower can apply for an extension if:

  • There are delays in renovations
  • Planning applications are taking longer than expected to receive
  • A sale has been agreed and the borrower is waiting for contracts to be exchanged
  • More time / money will be needed to complete the project
  • The borrower’s buyer withdraws unexpectedly

What is the difference between a first and second charge bridging loan?

“First” or “Second” fee indicates which loan will take precedence if you default. For example, if you already have a mortgage on the property that you want to extend, you can get a bridging loan with a second fee. If you intend to use the bridging loan to pay off your existing mortgage, the loan will be charged first. Likewise, if you took out a new loan that is secured against the property, you would qualify for the first loan. Details of whether a loan is a first or a second charge are included in the loan records alongside which the property is used as collateral.

How do you apply for a bridging loan?

After you’ve received an online bridging loan quote with financing options, a financial specialist will help you manage the application process. If you want to fill out the application, it will be helpful to prepare your documentation. Depending on your project, the lender may ask you for evidence of the following:

  • Proof of ID
  • Exit strategy
  • Evaluation report
  • Business plan
  • Your real estate experience
  • income

Ready to see what you might be eligible for? Get your bridging finance offer today.

further reading

How companies can use bridge finance to raise capital

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