bridging finance WHAT IS BRIDGING?
Bridging finance is short term finance that is quicker to deploy than a traditional mortgage product and usually has limited exit penalties, allowing a client to move in and out of the finance arrangement quickly and cost effectively. Bridging Finance can be used in a number of situations, but the key ones are as follows:
TIME
PLANNING Very often bridging can be used to acquire a property where there is planning gain. The bridge would then allow the planning gain to be achieved and the value increased, thus allowing the property to be either refinanced (based on the higher value) or sold.
ADD VALUE Much like the planning scenario, if you are able to add to the value of a property in the short-term, you may not wish to be tied into a term facility at the lower valuation. An example of this could be to acquire a commercial property where the average lease length (WAULT) is short but you are confident that you can increase the lease length and thus increase the value. This may also apply to a vacant property where the value of the property can be improved by securing a tenant.
If you are looking to purchase a property and the timescale is tight, perhaps it is an auction purchase, or the vendor requires a very quick sale, term debt can take several months to put in place, so a bridge can be used to acquire the property while the long-term debt is secured.
REASONS TO BRIDGE
EXIT
• Auction • Planning Gain • Active Management • Timescale
• Sale • Re-finance • Re-structure
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