Specialist bridging loans serve as an adaptable financial tool, ideal for investors seeking efficiency when seizing opportunities. As Marc Goldberg, CEO of sales & distribution at Together, notes, this form of lending stands out in today’s market—where traditional financing grows stricter—by delivering rapid, tailored solutions for those needing quick access to capital.
The latest Bridging Trends data shows that contributors transacted £831 million of bridging loans in 2023, making it the highest recorded annual gross lending figure since Bridging Trends launched in 2015. Despite this growth, many misconceptions exist about bridging finance and what it can be used for.
Common Myths and Misconceptions
One common myth is that high interest rates mean there will be little to no return on investment. However, Goldberg notes that bridging finance can enable investors to leverage their equity and fund further purchases, which can create a profit.
Another misconception is that bridging finance is a product of last resort. In reality, bridging loans are a strategic offering that provides flexible and fast lending solutions to borrowers in the short term, where time is of the essence.
Examples of situations where bridging loans can be useful include auction purchases, property renovation, and light refurbishment. They can also be used for business investments and development exit loans, providing valuable time for developers to sell assets.
Flexibility and Speed
Bridging loans are intended as short-term finance, and therefore, there needs to be a clear exit strategy to avoid any fees or charges that can come from late payments or failure to exit. While bridging finance is often associated with property purchases, it’s not the only use.
Businesses can use bridging loans to raise capital for renovations, repairs, or large-scale improvements. They can also provide short-term cash flow relief or the ability to purchase fixed assets to fuel growth, such as tax bills, land purchases, or business expansion.
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The process of obtaining a bridging loan is similar to any other form of secured lending, with an application process, documentation required, and a valuation. However, lenders like Together have streamlined the process to enable quick decisions, using automated valuation models and in-house legal teams.
Accessibility and Eligibility
Contrary to popular belief, bridging finance is not only available to UK residents. Together considers foreign nationals or expats, as long as they understand the customer’s objective, the source of the deposit, the security, and the viability of the exit.
Additionally, individuals with imperfect credit histories can still access bridging finance. Lenders look to understand the borrower’s requirements, the asset they are securing the loan against, and the viability of the exit. A clear path to paying back the loan in time and in full is essential to avoid default.
Bridging finance is not just for commercial use; it can also be used for personal finance needs, such as funding purchases of residential properties. Regulated bridging loans can help keep things moving when selling a house and buying another, even if a chain breaks or you need to move faster than those below you in the chain.
For access to fast, flexible finance, a bridging loan is a great avenue to explore. Together takes a common-sense approach to lending, assessing each customer’s personal circumstances and using their 50 years of expertise to find the best possible outcome. Their experienced team supports investors from concept to completion, helping them achieve their property ambitions.
Any property used as security, including your home, may be repossessed if you do not keep up your mortgage or any other debt secured on it. As with any financial decision, it’s key to carefully consider the options and seek professional advice before making a decision.
