Bridging Finance
Clients who are looking for a Bridging Loan can use it for a variety of purposes. Efficient, effective and quick, we can access Bridging Loan funding for sole traders, partnerships and limited companies. We can offer advice on products that can facilitate:
- Auction Purchase (quick completion time frames)
- Chain Break (bridging the gap between purchases – expected or not)
- Light/Heavy Refurbishment (small / large renovation works)
- Development Loans (smaller development projects)
- Below Market Value Purchase (discounted purchases)
- Capital Raise (for almost any purpose)
Is Bridging Finance For Me?
There are big differences in bridging finance, there are a lot of choices out there and there is a lot of online content on bridging out there too. However, we thought we would explain some of the key important points on bridging finance..
Unfortunately, we have seen clients approach lenders directly on bridging finance and the vast majority of the time, they are not aware of some of the big consequences on entering or even exiting a bridging deal – It can be easy to enter something but sometimes it can be hard to exit something. That’s why it’s important to seek professional advice.
There are two types of bridging finance: regulated bridges and unregulated bridges
Regulated bridges have more consumer protection as they are regulated by the financial conduct authority. What this means is if you and your family have lived in a property or plot or you have inherited a property without having relevant commercial experience you will most likely qualify for a regulated bridge loan. There are more aspects to a regulated deal. If you have lived in a property and you’re looking to convert the property into something else or you have inherited properties and you don’t own any of the buy to lets, generally,this is seen as a regulated deal. A regulated mortgage has more consumer protection as it is regulated by the Financial Conduct Authority so there is greater care and better and more informative advice on the lending process. These deals provide more protections for consumers and a more stringent process and processes to go through.
Non-regulated bridges essentially deal with the commercial sector such as buy to let or commercial development. It is a purely commercial transaction, designed for business purposes.
Non-regulated bridging is the bigger market and that is where the majority of bridging finance is primarily focused. Since the non-regulated market is of a larger scale, this is when the market can become complex or even misleading at times. Here at Clear Sky Financial Services we treat both regulated and non-regulated deals with the same attention to detail and scrutiny.
Is Bridging Finance Expensive?
Bridging finance can be very expensive, since bridging finance is designed to be a short term medium. The interest rates can be extremely high depending on your profile and lender. If you struggle to exit your strategy, then you can be penalised by the lender. This can become costly.
That is why speaking to the correct people and receiving concrete advice on what bridging lenders can offer and what fees you may encounter is extremely important.
The Financial Conduct Authority does not regulate some forms of bridging finance. As a mortgage is secured agai