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Bridging finance

Bridging loans and bridging finance?

Bridging finance can be seen as a short term business loan. It can be considered as a temporary loan which helps you to get you from point A to point B. The key idea behind is to finance you so that you can get from one step to another until you secure a more permanent form of finance. It is also considered as a short term property backed finance. These are often used to provide you with funds for a period of time in which you can refinance to longer term debt or can secure permanent form of finance. For example: A bridging loan could be used to buy a property before selling the existing home, bridging loans can also help in property renovation if the purchaser is looking to sell-on shortly after a property makeover.

This form of loan is widely used for accessing temporary solution, which is specifically meant for a short-term purpose. Usually, this may provide you with quick cash injection that you need to further move forward. Funds are made available within a relevant amount of time which will be ideal with a short timeframe.

Bridging loans are generally offered for between 1-18 months, with the condition of loan repayable in full at the end of this tenure. Unlike other forms of credit monthly interest is often rolled into this type of loan, meaning there will be no repayments to make at the term of the loan.

The bridging loan application process is far simpler than for other types of borrowing and application gets complete very quickly, usually within 5-14 days. Bridging finance is offered against almost any property or land and is used for a number of different reasons.

Types of bridging finance

There are two types of bridging finance. You can choose the one which will be most appropriate for you:

  • 1) A closed bridge: This requires you to know and tell exactly how you’ll pay off the loan. That means you are supposed to tell the lender what funds you will use to pay off the loan from the outset or we can say what will be your ‘exit plan’. Closed loans are generally settled within a few months.
  • 2) An open bridge: It generally doesn’t require an exit plan in advance and is used as a means for getting funds for an urgent transaction. As they don’t ask you to provide a detailed exit plan, so this can be a time-effective solution. You usually have a year to repay your debt.

Key takeaways

  • A bridge loan is considered to be a short-term financing that is used until an individual or company secures permanent finance.
  • Bridge loans are secured for short time, typically up to one year.
  • Such loans are generally used in real estate.

Features

  • Open to all
  • Fast turnaround
  • Versatile

Process of bridging finance

  • 01
    Bridging finance provider is accorded with summary of the deal, reasons for seeking a bridging loan, the security available and a clear repayment strategy or exit plan.
  • 02
    Finance provider receives evidence (if requested) for the purpose because of which finance is needed.
  • 03
    Provider then issues an offer letter that states the terms of the proposed finance & what is required to be done in order to obtain that finance.
  • 04
    Lender then instructs a value that has to be provided for a valuation report and sends all the required documents to your solicitor.
  • 05
    Solicitor further explains the terms and conditions for the loan.
  • 06
    An agrrment is then setup between the two.
  • 07
    Funds are then released to the solicitor.

Advantages of bridging finance

  • check_circle_outlineApplications are generally completed within 14 days, making this an ideal solution when funds are needed quickly.
  • check_circle_outlineUsually there are no monthly repayments thus, it can be efficiently used to raise capital where cash flow is tight, but you have the assets for comfortably repaying the loan.
  • check_circle_outlineThe bridging market is considered to be very competitive, and this leads to a reduction in interest rates. Thus, the rates start from as little as 0.37% per month, bridging finance has never been cheaper.
  • check_circle_outlineUsed in businesses for raising capitals, tax liabilities and to meet the business obligations.

Bridging loans lending criteria

  • Loan size
  • Term (maximum 36 months)
  • Security
  • Property type
  • Location
  • Credit history
  • Income evidence
  • Loan use
  • Interest payment
  • Application

Who would qualify for a bridging loan?

  • Customers who have proof of income
  • Customers having an excellent or impaired credit rating
  • Companies or individuals
  • Anyone with equity in their property

Want more information about bridging finance? or looking for most suitable finance solution for you? Talk to our finance experts now.

Features of Connect2India finance

Why finance with Connect2India

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Easy processing

Complete online application process makes it easier for us to process forms faster and provide same day loan approvals.

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Fast disbursals

With online loan processing, business loan is disbursed within 3-5 business days of loan approval.

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Collateral free loans

No need to put your valuable assets in risk, we have unsecured loan that do not require any collateral.

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Fair interest rates

Our advanced algorithms determines the best rates for the type of loan you business require.

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No hidden costs

There will be no hidden costs or any other charges involved. Only processing fee of 2% is charged

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Flexible repayments

Loan repayment structure can be customized depending upon how your business is growing.