Your Guide To Bridging Finance For Property Development And Investment

When looking to finance your property development you must carefully consider which loan is best for you and your situations. There are myriad options available – from development finance ideal for ground up builds to refurbishment loans for structural and non-structural renovation, with bridging loans often the ideal solution for all. It could be the one solution you need to complete your next property investment or project. Here how it works;

All About Bridging Loan

Bridging loans are an instant and accessible way to get the financing you need to complete your property development. As described, it bridges the gap between buying and developing property and selling or completing it. A bridging loan is also known as a short-term loan that can supply you with the capital you need in time.

There are similarities with other loans and mortgages, but with some key differences that make it particularly suitable for developers and investors alike. The average bridging loan lasts around 12 months, a great deal in less time, unlike other traditional funds. It is also a faster way to put together so in a time crunch when you need fast backing, bridging loans can allow you to make your changes and get your property ready for sale and profit as quickly as possible.

Working Principle

A bridging loan lender considers the potential value of your property after the development has been completed when deciding how much you can borrow and under what terms. This can make this type of financing the only choice if you have a property that needs huge amounts of work, or if you are choosing to start from scratch, as many lenders will only give out funds based on the current potential value of the property or land.

To move forward and get the funding is relatively simple and a lot quicker than most loans, with your provider generally ready to dispense the needed funds in just days or weeks. This makes bridging loans the optimal choice if you are in a hurry to get going, making up for the fact that they can be a more expensive option than some of the others on the market. 

Pros of Bridging Finance:

If you have reserved your dream property investment, a bridging loan can help it turn into a reality without selling any current assets.

Cons of Bridging Loan:

If things don't go according to your plan, the above mentioned pros will quickly convert into a con. If your home or property does not sell in time, you might be at risk of repossession.

Because of the risks around the opening bridging loan, you will need to be confident that you can take it on as an investor. 

• Financial stability to satisfy lenders that you can pay all debts
• Plan B in case of risks
• Realistic expectation 

So, in summary, we encourage you to apply as soon as the need becomes apparent. This gives us the chance of customizing the right option for you. Bridging loan is an operative way to purchase a new property, with a fair risk involved. It's better to get professional brokers' advice to explore more about your options.