A Property Finance bridging loan is typically used for commercial or residential property purchases. For example, in the event you can’t find the necessary funding for a new business premises, a bridging loan is often a viable short-term option. This type of funding is useful when you have a clearly defined plan for financing – for example, if you’re waiting on a mortgage application but need to make a property purchase right now.
The standard package can be up to £20m in value and usually lasts 12 months in duration. As this kind of finance is designed to ‘bridge’ a gap, it is designed for short-term use and the agreed repayment and interest are settled at the end of the term in one ‘bullet’ payment. Bridging loans differ from term loans in that they are specifically tailored to be temporary and a business can use the time to find longer-term finance that may be a better fit and then refinance at the end of the term.