What is bridge financing and who is it for?

Bridge financing provides an essential source of real estate funding. Here, we give an overview of what bridge financing is, how it works, and its benefit.

Published

3rd August 2021

Category

Houses

Bridge financing

In the property market, bridge financing is a short-term and ‘immediate’ financing solution. Bridge financing, also known as a bridge loan, bridge funding or bridging is used until a more permanent source of financing or an exit is secured. It allows property professionals to meet current commitments by providing cashflow when it is needed most. As bridge financing is short-term, contracts are typically provided over a term of up to 12 months; at Arbuthnot Specialist Finance Limited (ASFL), terms can be approved for up to 24 months.

 

History

High street banks have become increasingly selective in their real estate lending, encouraging property professionals to rely on specialist lenders like ASFL for funding construction projects and property purchases. Historically, bridge financing was viewed as a last resort for people who left arranging finance too late or were unable to secure it elsewhere. With the wealth of options and providers now available, this is no longer the case.

 

What are the benefits of bridge financing?

Bridge loan funding is used for a variety of real estate projects including auction purchases, refurbishment and conversions, ground-up developments, commercial and residential investments.

This type of financing is intended for property professionals who are looking for funding to improve a property to increase its value. This increase in value could lead to the sale of the property or allow for an increased level of rental income as the property is retained within an investment portfolio.

Bridge funding can also be used by homeowners who want to purchase a new home while they wait for their current home to sell.

To help property professionals with their application for securing a refurbishment or development loan with ASFL, we have created a series of checklists which can be accessed below:

 

About Arbuthnot Specialist Finance

Arbuthnot Specialist Finance Limited (ASFL) is the short-term property finance arm of Arbuthnot Latham, a private and commercial bank serving clients since 1833. The Arbuthnot Specialist Finance team provides real estate finance solutions for transactional, refurbishment and development projects in England, Scotland and Wales. This client-focused property financing service aims to build long-term relationships with clients and introducers, bringing Arbuthnot Latham’s relationship-led service to the specialist finance market. https://www.arbuthnotlatham.co.uk/commercial-banking/arbuthnot-specialist-finance 

 

Case studies

To find out how we’ve helped different clients read our case studies.

If you want to find out more about how we can help you achieve your real estate goals using the financing we provide, please do get in touch ASFLenquiries@arbuthnot.co.uk

 

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Registered in England and Wales No. 11103603. Registered Address: Arbuthnot House, 7 Wilson Street, London, EC2M 2SN. Arbuthnot Specialist Finance Limited is not authorised and regulated by the Financial Conduct Authority.

 

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