The application process for acquiring a bridging finance loan can be complex, and is best tackled by a qualified finance broker, by hiring a broker you will be making sure that you have somebody with the experience and knowledge needed to succeed in an application for a bridging finance loan is on your team.
There are two types of bridging finance load, the first type is termed a closed bridge, and is used to fund the purchase of a new property whilst awaiting the completion of a sale from the old property. A closed bridge is only applicable where the sale of the existing owned property has already passed beyond contract exchange. Lenders see this as a fairly low risk loan, as it is seldom the case that a property deal will fall through once that the contracts have actually been exchanged. A closed bridging loan is fairly easy to obtain, although it is still recommended that you use the services of a professional finance broker to make sure everything goes smoothly.
The second form of bridging loan is known as an open bridge and is far more complex in nature; you will definitely need to have a professional broker in your corner to help you with the application process. An open bridge is used to find the purchase of a new property before the old property has been sold, or indeed even before the existing property has been placed on the market. Lenders see this as a high risk type of loan, and the interest rate offered will reflect this. As part of the application process you will be required to submit a whole range of supporting documentation. You will defiantly be asked to supply details of the offer you have made on the new property, along with a fully audited set of company accounts, you may also be asked to present a well developed business plan that will show how you will make repayments, and more importantly detail an exit strategy for the loan running full term without the existing property being sold.
As we can see, the application process for a
bridging finance loan, especially in the form of an open bridge, is quite complicated. Hiring a professional finance broker is a sensible option; the broker will have access to a far greater number of lending products and will be able to match your requirements to the most suitable of these products. Your broker will also be able to assist with the creation of the relevant supporting documentation that will need to accompany your application. Consider your finance broker as your representative to the lenders, they speak the same language and understand how the lending market works, this means your application will be expedited as quickly as possible with very little input from you, as your finance broker will handle the entire application, keeping you advised as to what is happening, and dealing with any problems as they crop up.
Darren Horne is Managing Director of Best Commercial Finance Limited who are commercial mortgage brokers specialising in providing property development finance and short term
bridging loans.
