A bridging loan is an interest only loan, designed for a short period of time – typically 3 – 9 months secured on residential, commercial or industrial property.
Bridging loans can be completed quickly as there is a lot less red tape than other forms of finance. They can also buy you valuable time when you want to take advantage of an opportunity such as acquiring a property at a one-off special price or if your borrower needs to renovate an un-mortgageable property ready for rental or sale.
As the loan is interest only and for a short term, it’s important to know how the loan will be repaid. Typically this is through the sale of the property, maybe after it’s been refurbished, or by refinancing with another lender on a longer term loan or mortgage.
For businesses, landlords and property developers, bridging finance is a very useful way to quickly buy property, renovate it or change its use.
There are several scenarios in which borrowers need access to fast finance to progress their property project and these could include:
Your borrower is buying an investment property at auction and completion needs to take place within 28 days.
With Roma Finance’s ability to quickly assess a case and work with you and the borrower to keep the momentum moving forward, funds can be provided in time for completion.
Your borrower wants to buy a rental property that needs renovating and High Street lenders won’t lend because it doesn’t have a working kitchen or bathroom.
Flexible lending products mean that we can cater for virtually any property renovation – even those that the High Street lenders don’t want to lend on.
An opportunity has arisen to change the use of a property but your borrower is waiting for planning permission to be approved.
Because Roma Finance meet every borrower and has vast experience in dealing with property development, we are able to evaluate the situation and can often lend prior to planning permission being granted.
In these scenarios, borrowers can borrow up to 75% of the value of a property, more with additional security
A bridging loan can be used for almost any purpose and here are some cases Roma Finance has funded recently:
- Purchases from auction – with fast completion in the required time frame
- Planning gain / change of use – to maximise property value and income
- Development finance – allowing a borrower to build a property
- Chain breaking mortgage – to enable a borrower to progress a purchase before completing a sale on their existing property
- Releasing cash from probate on an inherited property – so that the property can be sold
- Refurbishment finance – to maximise rental income
- Purchase at undervalue – letting a borrower capitalise on a one-off opportunity
- Tax liability – helping to clear a debt
- Raising funds for business purposes – facilitating the growth and development of a business
According to some industry sources, around £2.5bn of bridging loans will be funded in 2014, so your borrower will not be alone.
They are available to anyone who owns or is buying a property, as long as there is a sensible way for the loan to be repaid, usually by the sale of the property or re-financing the loan at the end of the term.
Therefore, a bridging loan is not subject to your borrower’s personal credit rating. In fact, due to the attitude of UK banks towards real estate borrowers over the past 5 years, it is unusual for property professionals not to have had issues with their bank.
Often described as a ‘introducer’s lender’ we pride ourselves on an intricate knowledge of the property sector and providing knowledgeable input to every transaction. Working in partnership with the lender, borrower, valuer and solicitor ensures our processes are slick and quick, with the aim of working together to get the loan completed – and repaid.
Our Charter provides a set of business principles that define the way we work with our introducing partners, giving you confidence in placing cases with us.
As experts in property bridging finance, we can fund most types of property project, from change of use, to renovation, to auction purchase. Our products are geared for most borrower types too – including employed, self-employed and property professionals.