What is Bridging Finance?
Bridging finance is a short-term funding instrument used by companies to solidify their short-term position until a long-term financing option becomes available.
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Bridge financing “bridges” this funding gap between when a company’s money is due and when it can expect to receive funds later on. For example, a buyer who has a lag between the purchase of one property and the sale of another would often turn to a bridge loan.
The video below, by UK peer to peer lender LendInvest, provides a nice summary of bridging finance.
Bridging Loan Vs Traditional
Bridging loans typically have a faster application, approval and funding process than traditional loans.
However, in exchange for convenience, these loans tend to have relatively short terms and high rates of interest.
Growth of the Bridging Market
Bridging loans are becoming more and more common in the property market in both the UK and Ireland. For borrowers, it provides speed and convenience. In the current market, developers need to move quickly to secure better stock. For lenders, the current low-interest rate environment makes short-term bridging finance a very attractive option.
Property Bridges First Bridging Loan
Like our first two development loans, our first bridging loan is an exceptional investment opportunity. The loan is in the South East and has the following characteristics;
- Very experienced borrowers
- Extremely conservative loan to value ratio
- Clear-cut exit plan
- Excellent rate of return
The funds will allow the borrower to acquire their next development site in the South East while they finish construction on their existing site. This ensures the developer can seamlessly move straight into their next project.
This will allow them to provide much-needed homes and will also ensure the security of their workforce. We will be publishing full details of this loan on our platform very soon.