How can bridging finance support your property development ambitions?

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Matthew Anderson Arbuthnot Specialist Finance

In the property market, bridging finance is an immediate, short-term financing solution.

Bridging finance, also known as a bridge loan, bridge funding, or bridging is used until a more permanent source of financing or an exit strategy is put in place.

It allows property professionals to meet current commitments by providing cashflow when it is needed most. As bridging finance is short-term, contracts are typically provided over a term of up to 12 months; at Arbuthnot Specialist Finance Limited (ASFL), terms can be approved for up to 24 months.

Following our recent article on the misconceptions of bridging finance, here we highlight our top five uses for bridging finance.

We also provide details on how we can help you or your client achieve their real estate goals using the financing we provide.

1. Purchasing property at auction

Once a successful bid on a property is made, a same-day deposit must be completed which is typically 10% (may vary) of the bid, with the remaining balance typically paid within 28 days.

Due to the need for immediate access to finance, a bridge loan can be quicker to process than a traditional loan, which can take more than the 28 days.

Our residential investment facility – LTV up to 75% of MV, monthly rates from 0.6%.

2. Using bridging finance to secure a property quickly, typically at below market value

Property professionals can use short-term finance to acquire property prior to either onward sale or refinance onto long-term finance.

Bridging finance recognises value and purchase price. A loan underwritten against value acknowledges a property professional’s skill in achieving a keen price and cash flow.

Our residential investment facility – LTV up to 75% of MV, monthly rates from 0.6%.

3. Property renovations

Occasionally, a property may not meet the criteria for a traditional loan. This may be because it is uninhabitable or simply does not have suitable facilities such as a kitchen or bathroom.

Bridging finance can provide the finance to purchase the property and to conduct the necessary renovation work quickly. Once it is habitable, it should qualify for a more traditional loan like a mortgage.

Our heavy refurbishment & conversion facility with an LTV of up to 70%, loans from £100,000, and a monthly interest rate from 0.70%.

Our light refurbishment facility with an LTV of up to 75%, loans from £30,000, and a monthly interest rate from 0.65%.

4. Purchasing land before planning permission

Securing financing to build a property from scratch can be dependent on planning permission. If the property professional knows that planning permission will be granted, then a bridging loan can be used for the land purchase.

Our development finance facility – LTV of up to 70% and maximum GDV of up to 70%. Monthly rates are from 0.85%

5. Purchasing commercial property

Traditional lenders may require large deposits from property professionals in order to grant a commercial mortgage. Often, this can result in difficulties due to the amount of funds they need to access. Ultimately, this can lead to the property professional missing out on the property purchase.

Due to its short-term financing nature, bridging finance is an ideal, speedy solution where funds can be released in a matter of days depending on the circumstances.

Our commercial investment facility – LTV of up to 50% of MV, monthly rates from 0.75%

If you want to find out how bridging finance can help you or your client achieve their real estate goals using the financing we provide, please do get in touch at [email protected] or submit an enquiry.

It should be noted that we have a policy of not charging fees for default, extensions, exit, minimum interest periods, and non-utilisation. There are also no early repayment charges, and we only charge interest on the amount of debt outstanding at any time.