Bridging finance seems to be used more often in the business than in the residential market. Why should this be so? Possibly because residential customers are a bit wary of bridging finance, seeing it as very expensive. For people in the property or other types of business, on the other hand, bridging finance is very much part of life.
So why would you need bridging finance in the business arena?
If you are in any business, of any kind, and need to purchase new equipment, you will be very likely to find that your finance deal is not yet in place by the time you need to take delivery of the equipment. In this situation you will probably look for bridging finance as an interim measure.
Likewise, if your company needs to complete on a new office building before having sold the old one, you can use bridging finance to tide you over.
If you are in the property business, your most common reason for using bridging finance will be if you are buying property at below market value. This can enable you to make a quick purchase and then have time to re-mortgage at the actual market value. You can then pay off the bridging loan and have cash to do up the property. Or of course you may manage to sell it immediately at the full market value, in which case you will have the cash for your next purchase!
When you are buying property at auction, bridging finance is the most likely way you will pay for your purchase. If you bid successfully on a property, you must pay within 28 days, which may not give you time to arrange your regular mortgage.
If you have a large property portfolio, there will often be times when you need to get cash out quickly for further purchases. Bridging finance is a great way to do this as it can be secured on existing property.
You may be in the position where obtaining bridging finance is part of your normal business process. If so, you can usually obtain pre-approval for your loan up to a certain amount. This enables you to get hold of your funds very quickly and take advantage of the best deals.
You may be just taking your first steps in business and wondering if bridging finance might help you. Your best idea would be to look for a qualified mortgage broker who will be able to show you how to start using this great facility!
Please note that the FSA do not regulate commercial loans or commercial mortgages