Looking at Bridging Finance?

Bridging finance is an excellent tool, and our bridging finance partners know all the ins and outs!

An image of some steelwork resting on supporting walls on a self build house construction site


What is Bridging Finance?


Bridging finance is a short-term loan designed to help you bridge a financial gap, typically when you need to purchase something before receiving funds from another source. It's a bit like a financial bridge that helps you cross over to your next financial goal.

For example, if you're buying a new home but haven't sold your current one yet, a bridging loan can provide the funds you need to complete the purchase. It's a flexible tool that can be used for various purposes, such as:

  • Buying property
  • Property development
  • Investing in buy-to-let properties

It's so important that you get the right advice when considering bridging finance as the work involved is more complex but it can be an invaluable tool in when used correctly.

An image of a huge detached house in the countryside that has scaffolding surrounding it.


How would Naomi Financial help me?


Obtaining bridging finance involves a few key steps:

  • 1 - Finding a Lender: Our Bridging Finance partners will research lenders who specialise in bridging finance. They can be banks, building societies, or specialist finance providers. As all lenders have different lending criteria it is imperative that you work with someone who knows the lender's criteria, has relationships with the underwriters and knows how to cross the hurdles put in your way.
  • 2 - Assess Your Needs: Determine how much money you need and for how long. This will help you choose the right type of bridging loan. Our Bridging Finance partners will also look at when you need the finance, whether it be all up front, in stages or at the end of the project. They'll go through all of this with you to get you the perfect product.
  • 3 - Provide Documentation: Our Bridging Finance partners will help you prepare the essential documents the lenders require such as proof of income, bank statements, and property valuations and of course the application itself.
  • 4 - Secure the Loan: Most bridging loans are secured against an asset, such as your property. This gives the lender security in case you can't repay the loan. Our Bridging Finance partners will work with you to assess all the various options.
  • 5 - Application and Approval: Submit your application and wait for approval. The approval process can be quicker than traditional mortgages, but it's important to be prepared for potential delays. Our Bridging Finance partners will take you through the whole process from start to finish.
As we've said before, this can be a complex process, particularly for self-build / development finance projects but our Bridging Finance partners will be with you every step of the way to reduce the stress, worry and - most importantly - the workload involved in obtaining bridging finance.

A laptop on a table with a screen showing a sef build mortgage application. The laptop is sat on top of architectural drawings.


The drawbacks of bridging finance.


While bridging finance can be a valuable tool, it's important to be aware of its drawbacks:

  • Higher Interest Rates: Bridging loans often come with higher interest rates than traditional mortgages. This is because they are considered a higher risk for lenders.
  • Short-Term Nature: Bridging loans are designed for short-term use. You'll need a solid plan to repay the loan quickly, usually within a few months.
  • Potential Fees: In addition to interest, you may incur additional fees, such as arrangement fees, valuation fees, and early repayment charges.
  • Risk of Default: If you're unable to repay the loan on time, you could risk losing your asset.
Although bridging finance can appear complex and daunting, let's take a look at the positives!

A woman is holding a copy of a letter from her mortgage company saying she has been successful in her application for her self build mortgage that Naomi Financial helped her secure.


The good things about bridging finance!


Of course, there are things to wary of when looking at bridging finance as the solution to your situation but there are some great positives to bridging finance. Let's take a look at some of those now!

  • Quick Access to Funds: Bridging finance offers a rapid solution for urgent financial needs, particularly in real estate transactions.
  • Flexibility: It can be tailored to specific financial circumstances, providing a flexible approach to borrowing.
  • Preserves Property Chains: In property chains, a bridging loan can help prevent delays and ensure smooth transactions.
  • Investment Opportunities: Bridging finance can be used to seize time-sensitive investment opportunities, such as property development or business acquisitions.
  • Renovation Projects: It can provide the upfront funds needed for property renovations, increasing the property's value.
These benefits can far outweigh the potential negative outcomes of taking bridging finance. Our Bridging Finance partners will work through all the possible options with you to make sure this is right for you and they'll be with you every step of the way!

An image of a cement mixer truck arriving at site in order to pour the concrete into new footings that have been dug for the new self build house.


The information we need


To apply for bridging finance, you'll typically need the following information as a starter. Our Bridging Finance partners will go through it all with you to make sure they have everything they need to get you the most appropriate deal and to have a seamless process!

  • Personal Information: Your name, address, and contact details.
  • Financial Information: Proof of income, bank statements, and details of your assets and liabilities.
  • Property Information: Details of the property you're using as security, including its valuation.
  • Repayment Plan: A clear plan for how you'll repay the loan, including the source of the funds.

An image of Naomi from Naomi Financial stood outside a building that is in the process of being built. She is stood holding a hammer and a handful of nails.


A Quick Recap


Bridging finance can be a useful tool for bridging a financial gap, but it's important to use it wisely. Before taking out a bridging loan, carefully consider your financial situation and ensure you have a solid repayment plan in place. It's also advisable to shop around and compare offers from different lenders to find the most appropriate deal.