Property Development Finance Explained: Bridging Loans

A form of Property Development Finance that could help set you on your way

What are Bridging Loans?

Bridging loans are a financial solution in helping developers purchase land for development. They help facilitate a property purchase for potential developers that don’t have the necessary funds to go ahead themselves.

“Bridging Loans can be vital in aiding you with your own property portfolio. They are designed specifically for property investment.”

Bridging loans have become a popular alternative for property developers as banks and building societies are more reluctant in loaning large chunks of money for property building. Bridging loans should only be used for property investment and not as an alternative to personal loans.

How do they Work?

Bridging loans are designed to help property developers purchase land or help maintain a positive cash-flow during the development process. Bridging loans are generally a short-term solution, with lengths of payback ranging from four to eighteen months.

“The concept of a bridging loan is that the financial group will offer you the money you need and there will be a small interest in paying it back.”

Unlike mortgages, bridging loans can be paid out extremely fast. They can help developers get a project going instantly or help purchase land or properties that may not be on the market long.

Is a Bridging Loan Right for Me?

A bridging loan should not be used for personal finance. There are other loan options that may be more relevant to you. A bridging loan should be used for purely property investment and purchases.

For property developers, a bridging loan could be critical in getting your project up and running, quickly and smoothly. Ensure you have a plan outlined and stick to a timescale before taking out a bridging loan.

See what other potential investments you could undertake in securing your financial future.