Commercial Bridging Loan

Overview

Commercial bridging loans are short term loans where either a first or second charge against a property is used as security for the money.

Bridging loan facilities can be used to raise large sums of money to take advantage of opportunities as they arise such as auction purchases, property improvement and development for resale. Alternatively they can be used as a means of obviating a short term financial issue.

There are a number of different instruments offered by bridging loan companies, such as closed commercial bridging loans, open commercial bridging loans, non-status bridging loans, self-certification bridging loans.

The key is to look carefully at each offering and compare bridging loan to bridging loan.

Bridging loan companies will offer terms over several months though under extreme circumstances these can be extended out to a year and beyond. During the period of the loan there may be no requirement to make monthly payments and all interest costs will be rolled up to complete at the end of the arranged term.

Commercial bridging loans are available regardless of previous credit history.

How Much Can You Borrow, And At What Cost?

Clearly, the circumstances of the Loan and the status of the business will effect the willingness of lenders to participate. Potentially though a business could anticipate realising up to 100% of purchase price, alternatively between 75% and 80% of property value.

Each lender will take a differing view of risk and therefore comparing bridging loan costs is reasonable. Clearly though, time may be a factor, inviting loans from multiple lenders and following their administration, valuation survey and information needs may not be an option.

Items therefore to anticipate are the interest charges to be applied typically 3%-6% above base rate, be aware of any arrangement fees set, sometimes chargeable at as much as 1% per month of loan and the closing administrative fee.

There will generally be a valuation survey fee. Look very closely at the offer being made by the Bridging Loan Company to ensure that it is reasonable and affordable. It is always advisable to seek professional help.

How Long Does The Process Take?

It is always best to anticipate your needs and have arrangements in place prior to making commitments. If not, time will be taken in completing and processing the application, obtaining a survey of the property and reviewing financial information.

Timescales vary, but "in principle" lending decisions can be obtained in hours, and money in your bank in days.

Receipt of funds from the bridging loan company will normally be immediate on completion of this process.

Request A Bridging Loan Quote

Thank you for your enquiry