Bridging and Development Finance

bridging development finance

Bridging and Development Finance

Should I Take Out A Bridging Loan For Property Development?

Bridging development finance for property development is appealing to businesses and investors alike.

Although development bridging loans were once specialist products, these days they’re becoming more common place nationwide.

bridging and development finance london

More borrowers have now begun to realise how this type of short-term loan can be applied and are using this option to benefit both property transactions and businesses.

Both commercial and residential bridging finance options are now being used as a way of supporting property auction purchases, property development and renovation projects, and property transactions. Not only that, but businesses are also now choosing to take out this funding option if they need a speedy injection of cash.

As confidence grows in today’s housing market, development bridging finance for property development is becoming a more popular solution, but is it one that you should consider?

What Is Meant By Bridging Finance For Developers?

Development Finance Bridging Loans are short-term loans of 12-18 months

Bridging loans are short-term loans of 12-18 months or under that are able to be used by businesses or individuals for a purpose of their choice until the next financing stage or permanent funding becomes available. Secured, flexible, and fast, a non-status bridging loan for property development gives borrowers the speedy injection of cash they need that they may struggle to obtain elsewhere in a short timescale.

There are many kinds of bridging loan products for property developers.

Bridging Loan For Property Developers

Typically, there’s a property put forward as security or land with a huge planning uplift. Either way, there must be a strong exit to obtain bridging funding.

It’s also important to note that, while private homebuyers can take out regulated bridge loans to enable them to cover a gap between buying one property and selling another, any property purchase for business purposes requires an unregulated bridging loan. Therefore, an in-depth understanding of the terms and conditions is particularly important, since the level of protection for business property purchases is lower. Some people don’t know that you can get an unregulated second charge bridging loan where there is a first charge loan from the likes of Halifax or Santander as long as it is for business purposes.

Why Might I Use Bridging Finance For Property Development?

Commercial and residential bridging finance options exist to meet the needs of all kinds of property transactions. A home builder, home buyer, landlord, property developer, investor, or barn converter may choose to use this type of short-term loan to pay for their property purchase, refurbishment or construction project, or for business purposes. Bridging finance for property development can allow a developer to:

  • Secure a property quickly to avoid missing out on an opportunity.
  • Repair a property chain that has broken.
  • Construct a property.
  • Convert a property.
  • Buy a property at auction.
  • To purchase an unmortgageable property.
  • To renovate or develop land whilst gaining planning permission or a property.
Bridging Finance For Property Development

Can I Use A Bridging Loan For Auction Property?

Bridging loans can be used for all kinds of properties including buy-to-let, residential, commercial, or investment properties. It’s also possible to use a bridging loan for auction property as well as for property purchased via an estate agent.

What Should I Know About Bridging Finance For Property Development?

A bridging loan for property developers offers many benefits, but there is one thing to bear in mind before taking the plunge – interest rates are typically higher than those on other types of loan. This reflects the level of risk faced by the lender. While it’s often possible for interest to be rolled up then paid when the term reaches its end, eliminating the need to make monthly interest payments, the final repayment will be larger.

What Is The Benefit Of Taking Out A Bridging Loan For Property Development?

Bridging loans are a flexible and speedy financing solution that can typically be arranged within as little as 24-72 hours. As a result, they enable property developers to take full advantage of any opportunity that arises, resolve an emergency situation, or secure a property deal that otherwise they would have been unable to make happen.

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Bridging Loan London

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