Bridging Finance

Vision Finance arranges bridging finance for property developers up to £25 million with access to the whole of the market ensuring borrowers get the best rates.

Bridging Finance is a short-term loan secured against property or land typically for a period of up to 24 months.

Bridging loans can be arranged quickly - we have built strong relationships with lenders enabling us to obtain terms within hours, and loans can complete with days. Security can be provided by one or more properties on a first, second and even on a third legal charge basis.

Typically bridging loans are available for up to 75% LTV (even if purchased below market value), and no Early Repayment Charges are payable on bridging loans. Bridging loans are designed to be flexible, and Vision Finance, together with the lender and the borrower will structure the loan in the most appropriate way. This can include no upfront fees and flexible repayment schedules including no interest payable until maturity of the loan.

Uses for Bridging Finance

Borrowing capital quickly – We see numerous examples where property developers have the opportunity to secure a great deal if they can complete quickly, and bridging finance is ideal in this situation. Vision Finance will work vigorously with the borrower and the lender to ensure the loan is completed on time.

Property refurbishment – Traditional (i.e. High Street) lenders are still adverse to refurbishment lending, and often take far too long to approve a loan. Short term lenders will provide 65-70% LTV to purchase the property, and additionally fund 100% of the refurbishment costs.

Broken property chain – A client wants to purchase a new property but is still in the process of selling their existing residence. A Bridging Loan enables them to secure the new property before the sale of their existing property goes through. The Bridging Loan can be secured against the new property being purchased or any other properties owned by the borrower. In some instances, 100% of borrowing can be raised to secure your client their new property.

Un-mortgageable properties – Conventional lenders will generally not lend on a property if there is no kitchen, bathroom, or running water and this would generally render a property uninhabitable. However, bridging lenders will look at the value of the property in its current condition, and are generally willing to lend up to 75% LTV.

In addition, if a property has less than circa 50 years remaining on its lease, conventional banks are very unlikely to finance the property. A borrower will often take out bridging finance, extend the lease, and then refinance using a traditional lender.

Development finance – Please click here to learn more about the financing solutions Vision Finance offers property developers.

Auction finance – As bridging loans can be put in place quickly, they are often used to fund the outstanding balance which is required by the date of completion following an auction purchase–which is usually within 28 days. Please click here to learn more about Vision Finance’s guide to buying at auction.

Planning permission – Short term bridging loan secured against land or property. The borrower proceeds to obtain planning and later raises Development Finance, or sells at an increased value and repays the loan.

Defined Exit Strategy

Bridging lenders need to be satisfied that the borrower has a clearly defined Exit Strategy in place. By this we mean does the borrower have a plan in place that will ensure the bridging loan will be repaid within the life of the loan (i.e. within 12 or 24 months depending on the lender).

Typical examples of an exit strategy

  • Sell the property, or refinance with a conventional lender, once the property has become habitable. Lenders will typically need to see proof of funds required to develop the property.
  • Sell the property/land, or refinance with a conventional lender, once planning permission has been granted.
  • Repay the bridging loan once the sale of borrower’s first property has completed. Lenders will look to see the existing property is being actively marketed (this is very common in the case of broken chains).

In summary, Bridging Lenders are significantly more flexible than traditional lenders and will consider various application types including:

  • No minimum income requirements;
  • Refurbishment projects;
  • Adverse credit history; and
  • Refinancing of existing bridging finance.

Please speak to one of our advisors on 0207 206 2500 to find out how you or your clients can benefit from the various solutions bridging finance provides. Alternatively, please e-mail the Bridging Team.