From Dream to Reality: A Bridging Loan can Make Your Goals Achievable Now!

Why would you pursue a bridging loan?

Bridging loans “bridge the gap” to longer-term funding from the sale or refinancing of a property. They provide flexible and swift funding, enabling you to seize attractive opportunities that may not be there in a month or two or even sooner.

These loans are also referred to as bridging finance, caveat loans, swing loans or often, just as a bridge.

Key Uses of Bridging Finance:

Our multi-award-winning brokers can help you find the perfect bridging loan for your needs. We’ve succeeded in even the most difficult sectors where other brokers are commonly unsuccessful.

Acorn.Finance can make your dreams a reality with a custom-tailored bridging loan for the following purposes.

Property Transactions: Whether you’re buying a new investment property or finishing a project, a bridging loan can provide rapid funding to bridge the gap to your property sale.
Downsizing and Upsizing: If you’re upsizing or downsizing, a bridging loan can get you into your new home much faster. Experience a smoother, less stressful move without waiting for the sale of your property.
Auction Purchases: Snapping up that auction dream property requires fast financing. Our industry-veteran brokers can help you secure properties in even the most competitive circumstances.
Business Ventures: A bridging loan can help you maximise your entrepreneurial opportunities. Maybe you’re seizing a lucrative deal, or perhaps you need to cover operational costs or manage cash flow gaps. Acorn.Finance can help.
Property Development: Property developers need initial capital for acquisitions, construction, and renovations. Bridging finance can kickstart your projects and help you build lasting momentum.

Bridging finance is a dynamic funding tool supplying reliable short-term capital. A bridging loan can help you navigate market-related challenges and capitalise on attractive opportunities before they disappear.

Types of bridging finance products:

We pride ourselves on our flexibility to find borrowers the best bridging finance solutions for their unique needs.

Standard bridging finance

Standard bridging loans are ideal for auction purchases or other situations where speedy funding is key. They can also be used to purchase a property or portfolio below market value.

Refurbishment loan

It doesn’t take much for a property to become unmortgageable. An unusable kitchen or bathroom is all it takes to get denied by a mortgage lender. A refurbishment bridging loan can quickly provide the capital you need to remedy the situation.

We can help you secure a heavy or light refurbishment loan depending on your individual needs. To read our comprehensive guide to refurbishment finance.

Regulated bridging finance

The Financial Conduct Authority regulates some mortgages, so if the property in question is your primary residence or a close relative’s, you’ll need a regulated bridge.

The regulated nature of these loans can sometimes restrict availability.

Development loan

For ground up development, bridging finance typically isn’t the ideal solution. That’s because development finance is based on the value of the finished project. A bridging loan based on land value wouldn’t cover your total expenses for the build.

Read our development funding page to learn about the four types of development loans we offer.

Bridging finance – Frequently Asked Questions.

What is bridging finance?

A bridging loan is a short-term loan that bridges the gap between buying a new property and selling an existing one, refinancing, or selling the subject property.

How does bridging finance work?

There are two types of bridging loans: closed and open loans. A closed bridging loan has a fixed repayment date.

Closed bridging loans are used when the borrower knows they’ll have the funds for repayment soon. The buyer has exchanged contracts and is waiting for the sale to go through, the property is being refurbished prior to being refinanced or sold, or refinanced after an auction purchase.

An open bridging loan has no fixed repayment date, but you’ll be expected to pay it off within three years.

Be mindful that the lender will expect evidence of a clear repayment strategy, such as using equity from a property sale or remortgaging the property.

How do I qualify for bridging finance?

Lenders use a range of criteria when deciding loan eligibility, including:

Good credit (Although our range of lenders will allow some flexibility here, just discuss with your broker.)
Proof of income (Again, if the exit is by sale of the property, income might be less relevant to the bridging lender.)
Collateral security property (Bridging lenders can take charges (either first or second) to increase the loan to 100% or more if needed)
A viable repayment strategy

We can tap into our extensive network of bridging lenders to find the perfect loan for you.

What are the pros and cons of a bridging loan?

Bridging loans can be valuable financial tools when you need quick capital. But you need to understand their advantages and drawbacks to make an informed choice that suits your situation.

Pros:

Fast access to funds

Great for time-sensitive opportunities

Raise finance for investment properties

Raise finance on an “unmortgageable” property

Flexible financing depending on the type of loan

Cons:

Risk of asset loss in the event of a loan default

Higher interest rates and fees than a typical mortgage

You’ll need reliable proof of a clear exit strategy to qualify

If you’re wondering whether a bridging loan is right for you, our expert brokers can assess your situation and recommend the best path forward.

I’ve been denied a bridging loan elsewhere. Can you help?�?

Absolutely, we’ll do everything in our power to get you funded. Our reputation for superior service has earned us seven UK Best Broker awards. We’ve secured funding for customers who came to us after stressful last-minute denials and funding complications, and we’ll do our best to help you as well.

We also have years of experience working in some of the hardest sectors to secure funding for, including pubs, small hotels and retail shops, large HMO properties, and other traditionally difficult funding situations.

What is a bridging mortgage?

“Bridging mortgage” is a rarely used term for bridging finance. Although the term “mortgage” often refers to a long-term loan secured against property, it’s actually the act of taking the security against a property. So “bridging mortgage” is just another term for bridging finance!

How much can you borrow with a bridging mortgage?

Depending on your needs and circumstances, you can obtain a bridging mortgage for as little as £25,001 or for hundreds of millions of pounds.

Your loan limits are set by the value of the property available for security–which can be your existing portfolio, as well as what you’re purchasing–and your ability to meet your exit plan.

Lenders will typically allow funding of up to 75% loan to value, but up to 80% is available in some cases, and even 90% for refurbishments or conversions.

What are first and second-charge bridging loans?

When you take out a bridging loan, a ‘charge’ will be placed on your property. This is a legal agreement prioritising which lenders will be repaid first should you default on your loans.

Both a first and second charge bridging loan (and sometimes even a third charge) take your property as security in case you default on repayments. Typically, if you still have a mortgage on your property, the bridging loan will be a second charge loan, meaning that if you failed to meet repayments and the property was sold to pay off your debts, the mortgage would be paid off first.This means that a second charge bridging loan carries greater risk for the lender, which can be reflected in a higher interest rate or a lower loan-to-value ratio.

How many bridging loan lenders are there?

The Acorn.Finance lending panel includes well over 100 bridging lenders, each with their own lending criteria, specialisation, and uses.

Your bridging finance broker will work with you to ensure that you get the funding you need, when you need it!