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What is Bridging Finance?

What is Bridging Finance?

Bridging finance was traditionally used to ‘Bridge the Gap’ between two mortgages as an individual needed to complete the purchase of a new property whilst still waiting for the previous property to be sold. However the industry has moved on a lot since then and bridging finance is now much more mainstream with over £700 Million completions in the U.K in just 2018 alone (Financial Reporter Jan 2019). Bridging finance can be used in many different scenarios. Below is an overview of what bridging finance from Seneca could be used for.

Purchase

Non Regulated Bridging finance is primarily used for the acquisition of a residential or commercial property to either be retained in a ‘Buy to Let’ portfolio or to be sold on the open market for a profit, sometimes after minor refurbishments. The main advantage of taking a bridging loan from Seneca is the speed of completion. This can be particularly beneficial when a property is being purchased at auction and there is a short timeline to have the balance paid in full usually C.30 days. A long term commercial buy to let mortgage can take several weeks or months to complete. It’s important on this point to remember that Seneca Bridging is an unregulated lender. We can’t provide finance on properties in which the borrower (or their family) has lived in or will live in the future.

Capital Raising

Clients who have an existing property portfolio (with sufficient equity) can use a Bridging Loan to release some of this equity to aid the purchase of an additional portfolio property. These monies could also be used to de necessary repairs on properties in the portfolio, redevelop the properties to enhance the values or to release some much need working capital to be used for business purposes. In some cases Seneca can consider taking a 2nd charge against a borrower’s main residence subject to suitable loan to values and that the monies will be used purely for business purposes.

Minor Refurbishments

Most long term mortgage providers have a minimum property standard to class a property as being mortgage suitable. Usually, as a minimum standard, the property must have a fully functioning kitchen and bathroom. This means that even if a property is structurally sound obtaining finance can be difficult. Seneca could consider a bridging loan on properties in this condition, subject to a satisfactory valuation, and we can consider releasing further monies to get the property back up to a long term lender standard. Minor refurbishments are any works that don’t require planning permission or building control sign off. E.G. the installation of a new kitchen or bathroom.

Developer Exit

Developer exit finance is a short term property loan secured against a recently completed development scheme. Once the scheme has been fully signed off by building control and any new build warranties or required insurance policies are in place we could then use these properties as security. This would allow the developer additional time to sell or obtain a long term mortgage to ensure the finance on the original development has been redeemed in full within the agreed timescales, and in turn avoid any penalty fees.

Seneca Bridging has a strong team with a concentration of property lending experience and we are able to guide developers directly as well as via brokers on how we can best assist them. We are contactable on 01942 295 982 or by email at enquiries@senecabridging.co.uk. Seneca Bridging offers short term bridging loan funding for residential and commercial property transactions, auction purchases, renovations and development projects. Seneca Bridging is a principal lender, not a broker or intermediary service. The team lends their own funds so don’t need to consult other lenders or banks. Seneca Bridging provides unregulated bridging and development finance to individuals and companies throughout England, Wales and Scotland. Seneca Bridging’s reputation is built on providing quick, flexible and dependable finance.