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UK Commercial Property Bridging Finance – Updated January 2024

Commercial Property Bridging Loans

Are you looking for Bridging loans on a Commercial Property?

Frequent Finance has lenders that offer:

  • Fast completions for that bargain purchase
  • Change of use from commercial to residential
  • Title splitting projects
  • Access to an extensive range of lenders, including firms of solicitors lending their own money
  • No Exit Fee in most cases
  • Lending in England, Wales, Northern Ireland and Scotland
  • Full or part-interest roll-up options
  • Non-Status loans
  • 1st and 2nd Charge lending available
  • Non-Regulated Loans and Regulated Loans
  • Terms up to 3 years
  • Daily Interest with some lenders
  • 100% of the funding available with additional security in many cases
  • Rates start from 0.49% per month
  • Loans up to 90% of purchase price or 85% of Open Market Value
  • CCJ’s / Arrears / Low Credit Scores accepted by many of our lenders

Please inquire below to find out more:

Commercial Property Bridging Loans

UK commercial property bridging finance represents a nuanced, flexible funding mechanism designed to bridge the gap between the immediate need for capital and the eventual securing of longer-term financing or the realization of an asset’s value. This form of financing is particularly pivotal in scenarios where speed and agility are of the essence, such as auction purchases, property development, or overcoming short-term financial hurdles. The intricate landscape of bridging loans encompasses various elements, from the valuation and solicitors’ fees to the specificities of loan-to-value ratios and the potential for fast completion times.

The valuation process is a cornerstone in the underpinning of bridging finance, serving as the bedrock upon which lenders assess the amount of loan an applicant is eligible for. This appraisal determines the current market worth of the property in question and, in many instances, its potential value post-renovation or development. The accuracy and thoroughness of this evaluation are critical, influencing the loan-to-value (LTV) ratio offered. LTV ratios in bridging finance can be quite flexible, often ranging up to 70-75% of the property’s value. However, this can vary based on the lender’s policies and the perceived risk associated with the loan.

Solicitors play an instrumental role throughout the bridging loan process, overseeing the legal intricacies of securing and finalising the finance agreement. Solicitors’ fees, therefore, constitute a significant part of the overall cost of a bridging loan, covering everything from the legal, due diligence on the property and the preparation of loan documents to the eventual disbursement of funds. These fees can vary widely based on the complexity of the transaction and the solicitor’s expertise.

Fast completion times are a hallmark of bridging finance, with some loans being arranged within days. This practicality is particularly beneficial in auction scenarios, where purchasers must complete transactions within tight deadlines, typically 28 days from the auction date. Bridging loans offers the liquidity needed to meet such deadlines, ensuring that investors do not miss out on lucrative opportunities.

Refinancing is another everyday use for bridging loans, allowing borrowers to restructure existing debt or secure more favourable terms. This can be especially useful for commercial property owners facing arrears or looking to consolidate debts under more manageable conditions. Moreover, bridging finance can provide a lifeline for individuals with bad credit, as many bridging lenders assess loan applications based on the property’s value and the exit strategy’s viability rather than solely on the applicant’s credit history. This approach often means that no credit check is required for loan approval, making it an attractive option for those who may not qualify for traditional financing.

For companies, corporations, and limited entities (Ltd), bridging finance offers a versatile tool for capital management, whether for acquiring new properties, title splitting for enhanced asset value, or injecting short-term cash flow. The corporate structure of the borrower can influence the loan’s terms, with lenders typically requiring a first or second charge over the property as security. A first-charge loan gives the lender precedence over other creditors in the event of a default. In contrast, a second-charge loan sits behind a primary mortgage but still provides the lender with a level of security.

Interest roll-up options allow borrowers to defer interest payments until the end of the loan term, providing additional cash flow relief during the loan period. Furthermore, the absence of an exit fee in some bridging finance products means borrowers can repay the loan early without incurring penalties, offering further flexibility. Rates for bridging loans can vary significantly, influenced by factors such as the loan amount, LTV ratio, and the perceived risk associated with the loan. First-charge loans typically offer lower rates than second-charge loans due to the reduced risk for the lender.

In conclusion, UK commercial property bridging finance serves as a critical enabler for rapid, short-term funding, offering bespoke solutions tailored to the unique needs of each borrower. From facilitating fast completions at property auctions to providing a financial stopgap for companies in transition, bridging loans embody a dynamic and essential tool in commercial property investment and development.

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