If you need finance quickly and are unable to arrange long-term mortgage finance immediately then short-term Bridging Finance might be the answer. Bridging Finance is a short-term loan to an individual or a company secured against residential or commercial property. The loan is repaid once the property is sold or refinanced with a long-term lender.
A bridging loan is usually taken out to solve a temporary cash shortfall that may arise when buying a property or business, or perhaps paying for a renovation.
In respect of housing finance, they are typically used to finance a second property before the customer has sold the first.
Terms range from 1 month to a normal maximum of 12 months, but terms of up to 24 months can be arranged dependent upon project and rationale.
Many lenders will accept applications on a limited status basis viewing the main source of repayment being the sale or re finance of the property.
Underwriting of bridging loans is generally similar to the process for any mortgage in that applicants must undergo underwriting to become approved for a loan. Underwriters will consider the personal covenants of the prospective borrowers and the value of the security. The lender has to balance the risk of the loan not being paid, or not being able to realise the security with the interest rate charged.
To assist you in giving broad terms to your customer please refer to our Commercial Mortgage Terms Guide which we update regularly or of course please feel free to contact one of our advisors on 0845 873 8706