What is a bridging loan? Seven experts weigh in
By Hannah Duncan
Just 14% of Brits know what a bridging loan is, making it one of the top five most confusing financial terms today[1]!
And to make matters worse, over half of the people surveyed were not even aware that bridging loans exist.
A whopping 53% had zero knowledge or awareness of the term altogether.
So, to help support the financial literacy movement, we decided to go back to basics.
Starting with the simple question, “What is a bridging loan?”, we approached the most seasoned and experienced experts we could find to see if they’d provide a definition.
Because, when you have access to the best in the business… Why would you ask anyone else?
Here’s a breakdown of how our seven expert bridging lenders define bridging loans. We especially loved how each answer talks about overcoming an obstacle.
In your own words, what is a bridging loan?
“Enables a borrower to access funds extremely quickly”
“A bridging loan is a type of short-term finance, which is secured on property or land and enables a borrower to access funds extremely quickly. Bridging finance can act as an enabler for a longer-term
solution for the investor or developer.
This type of finance option differentiates itself from other loans, such as a traditional buy-to-let (BTL) mortgage, as a bridging loan is usually arranged for short-term requirements, perhaps to but a property for investment, or renovate a property for sale, whereas a BTL mortgage is a long-term option for property investors.
Many borrowers use a bridging loan as an immediate funding solution and then move onto a longer-term mortgage after several months.
Additionally, bridging lenders provide bespoke finance that is tailored to suit the borrower and their requirements, compared to other mortgage providers which can lack in this area”.
Gary Bailey, Managing Director of Hope Capital
“Essentially a short-term mortgage”
“A bridging loan is essentially a short-term mortgage. Property professionals typically use bridging loans to “bridge” the gap between the purchase of a new property and the approval of a traditional mortgage, the release of capital from an existing property for business purposes or further property investment. It could also be used in the form of a Sales Period bridge pending the sale of a newly developed property”.
Heather Hancock, Lending Manager at Black & White Bridging
“Short-term solution”
“A flexible short-term solution for a wide range of borrowing needs”.
Jack Coombs, Director of Aspen Bridging
“Borrow money for a short period”
“A bridging loan is where you need to borrow money for a short period. It can help to ‘bridge the gap’ if you want to build a property portfolio, buy a commercial property or land to develop. Bridging loans can also be used if you buy a property at auction, where you’ll need the money immediately but may not have the funds readily available or have the time to get a mortgage.”
Charlotte Rutter, Head of Communications and Network Relations for Roma Finance
“Bridges a gap”
“Bridging loans are a form of short-term finance that ‘bridges’ a gap between situations. They can be used to help cash flow, capital raising, avoid property chains, buy new property before the sale of another or help you to complete should you face extended mortgage delays”.
Craig Reiselson, Senior Underwriter at Market Financial Solutions
“Overcome a complication”
“A bridging loan is a flexible short-term loan that enables a borrower to overcome a complication or obstacle on the way to their long-term objective”.
Danielle Evans, Business Development Manager at Alternative Bridging Corporation
“A term of 1-24 months”
“A short-term loan, sometimes business use loan, sometime not, usually arranged over a term of 1-24 months, secured on a property, whether residential, commercial, land or a development site”.
John Clifford, Managing Director, Conrad Capital
“Get you simply from one point to another”
“What it sounds like really – something to get you simply from one point to another efficiently. Whether to help you secure a purchase quickly whilst you get longer term finance in place, or bridge the gap between loans, or whilst getting planning in place, a bridge loan should be something that is quick to get and provides time for you to sort the longer term plan”.
Tom Short, Associate Property Director, CrowdProperty
Quick-fire round! In JUST THREE WORDS, how would you describe bridging loans?
Quick, Flexible, Bespoke
Gary Bailey, Managing Director of Hope Capital
Fast, Flexible Finance
Heather Hancock, Lending Manager at Black & White Bridging
Swift, Reliable, Gap-filling.
Jack Coombs, Director of Aspen Bridging
Quick, Simple, Effective
Charlotte Rutter, Head of Communications and Network Relations for Roma Finance
Fast, Flexible, Bespoke
Craig Reiselson, Senior Underwriter at Market Financial Solutions
Fast, Flexible Solutions
Danielle Evans, Business Development Manager at Alternative Bridging Corporation
Fast, Efficient Funding
John Clifford, Managing Director, Conrad Capital
Quick, Flexible, Efficient
Tom Short, Associate Property Director, CrowdProperty
Thank you to all of our experts for their time and definitions! If you’d like to learn more about these quick, flexible, efficient and bespoke loans, our range of free guides contain all the essentials.
Hannah Duncan is a freelance writer with a passion for finance, sustainable investing and fintech. She loves writing engaging content for industry magazines and investment services, as well as keeping a personal blog at www.hdinvestmentcontent.com
[1] Source: Uswitch survey
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