Bridging finance is usually required as a short-term solution when borrowers are looking for a quick purchase or they would like to purchase a site to enhance planning and then either sell or develop the project.
There are a wide variety of lenders offering bridge loans, some will lend on existing assets such as residential or commercial properties which have an existing use value, others will be more flexible and lend on development land. Typically borrowers can achieve up to 75% of the property cost or value and usually whichever is the lower however, in certain circumstances there are exceptions to achieve higher gearing.
Most bridging loans will incorporate the finance costs within the facility. If the asset and the borrower are particularly good quality, then it can be agreed that the interest payments are paid each month by the borrower and this can also increase the level of gearing achieved.
Whilst this type of lending can be more expensive, it is because there is a higher risk and it is a short-term loan. Therefore, if a borrower utilises these facilities for a short period and to make more profit, a bridging loan can be a great solution.
Aureum has a number of lenders that will provide the bridging loan whilst planning is obtained or improved and then will provide the development loan for the project which can save time and expense.