Bridging
Bridging Finance
Bridging Finance is a source of funding needed to fill a gap between one or more events or circumstances.
A Short-term Finance Solution.
The criteria on which bridging finance is secured is different to conventional long-term funding.
Bridging finance can be secured against many types of property or land on either a first or second charge. Bridging finance is used for a number of reasons, some of which are noted below:
- Purchase
- Re-finance
- Capital Release
- Improvement
Bridging finance now comes in various forms, with a number of bridging products available. Terms of up to 36 months can be secured. Multiple repayment options are on offer including roll up payments, deferred payments and stage payments. Satisfactory credit history may be required but this may not always be the case. The variety of products on offer enables the client to pick and choose certain characteristics within the finance agreement.
We recognise that every clients finance requirements are unique. We aim to present bridging solutions that are both cost effective and efficiently delivered. This is why our focus is on establishing a positive relationship with the client, preferring to meet our clients face to face to get an in depth understanding of the client, their position and their financial needs. Meeting with the client at an early stage allows us to find a facility that is in line with the borrowers requirements.
As a broker we not only strive to get you, the client, the best possible funding solution, but also to guide you through the process. We aim to help the client in reacting to externalities that may affect the funding solution required. We act in the interests of the client, helping to work the asset to maximise returns. Ultimately, by aligning our interests with those of the client and establishing a close relationship we can react quickly to market changes, while the clients needs stay at the forefront of decision making.
Our experience within the bridging finance market enables us to minimise the time taken to present and package deals. We have experience working for both sides of the coin, with this experience working as a lender enabling us to package deals in such a way that is most attractive to lenders. With access to a wide range of bridging finance companies and knowledge of almost all the providers we ensure that each and every client obtains finance terms that suit them, with a lender that has the same objectives as the client, working in tandem together rather than individually.
We see ourselves as more than a broker. At bridgedevelopments we like to think go beyond the responsibilities required of us as a broker.
TRANSACTION TYPE
It sounds very simple, but broken down to component level:
- Renovation (i.e. light work no structural to revamp to make it look new again)
- Refurbishment (i.e. light work no structural to rebuild or replenish with all new materials)
- Conversion (change of use with or without structural change)
- Heavy Refurbishment (i.e. including structural works)
- New Build (i.e. ground up projects)
COMPLEXITYThe complexity of a transaction often determines which of many lenders will consider supporting the deal, with the following as financing thresholds. One size most certainly does not fit all:
| Transaction |
Borrower |
| Single or Multiple Unit |
Starter |
| Residential, Commercial or Mixed Use |
Seasoned Professional |
| HMO or Student Accommodation |
Track Record |
| PDR or PRS |
Credit Profile |
| Pre or Post Planning |
Net Worth |
| Phased Build |
Developer, Contractor or both |
SIZEThe transaction size often determines which of many lenders will consider supporting the deal, with the following frequently used financing thresholds:
| >£25k to <£100k |
>£1m to <£5m |
| >£100k to <£250k |
>£5m to <£10m |
| >£250k to <£500k |
>£10m to <£25m |
| >£500k to <£1m |
>£25m+ |
RISK PROFILELenders have differing risk appetite based on specific criteria:
- Loan to Value (LTV)
- Loan to Cost (LtC)
- Loan to Gross Development (LtGDV)
- Return on Investment (RoI)
- Return on Costs (RoC)
LOCATIONFinally, depending on the location of the project it will attract a varying basket of lender:
| Prime London |
UK |
| Non Prime London |
Prime Towns |
| Within M25 |
Built Up areas |
| London & South East |
Rural |
| England, England and Wales |
Proximity to Transport |
FUNDINGFunding comes from various sources, with no one lender monopolising the market, making it fragmented, subject to change with lenders entering and withdrawing from the market.
- High Street banks
- Specialist banks
- Finance houses
- Bridging lenders
- Private Equity / Venture Capital
- Family Office / HNW lenders
- Peer to Peer
Type + Complexity + Size + Risk + Location = Choice of Lender
We think you now have got the gist of things. Putting it all into the melting pot, you can see there are numerous potential permutations, and that is without addressing the technical aspects. In conclusion, even for seasoned developers, seeking impartial professional advice is paramount - which is where we come in. Lenders come and go and are structured differently, having a potentially serious impact.
We would like to be thought as your business partner, able to guide you through the myriad of options within the time constraints afforded.
We look forward to the opportunity of assisting you with your property finance, circumnavigating many of the issues along route.
