What is Bridging Finance?

Bridging finance is a short-term loan that is designed to bridge a gap between two different financial transactions. It is often used in property transactions, but can also be used in other scenarios where a short-term injection of funds is needed.

In the context of property transactions, bridging finance can be used to provide funding for a new property purchase before the sale of an existing property has been completed. This can be especially useful if a buyer has found their ideal property but has not yet sold their current property, and needs to secure the new property quickly to avoid losing it to another buyer.

Bridging finance can also be used to fund property refurbishments, as it provides a short-term injection of funds to carry out the necessary work before selling the property.

It can be a good option in the UK for certain situations where there is a short-term need for funding that cannot be met by traditional forms of finance. Some common scenarios where bridging finance may be useful include:

1. Property transactions: Bridging finance can help property buyers who need to complete a purchase quickly but are waiting for funds to become available from the sale of an existing property. Similarly, it can help property investors who want to secure a property quickly before their competitors.
2. Property refurbishments: If a property owner wants to refurbish a property before selling it, bridging finance can provide the necessary funds to carry out the work quickly and efficiently.
3. Auction purchases: Bridging finance can be useful for property investors who want to purchase a property at an auction but do not have the cash available to complete the transaction immediately.
4. Business cash flow: Bridging finance can provide short-term funding for businesses that need to cover unexpected costs or bridge a gap in cash flow while waiting for income.

It is important to note that bridging finance typically comes with higher interest rates and fees compared to other forms of finance, and therefore should be considered carefully before committing to it. It is advisable to speak to a good mortgage broker before taking out bridging finance to ensure that it is the right option for your specific needs and circumstances.

If you want to discuss your financing options, call PKS on 01256 701205 or email [email protected].

PKS - Mortgage & Insurance Experts