bridge finance uk

What is a bridge loan?

26 / 11 / 21

In business, cash flow can be an issue and at times like these, you may find yourself seeking a short-term finance solution.

As bridge loan specialists, Velocity Bridging has answered your commonly asked questions.

What is a bridging loan?

Bridging loans are asset-based, short-term financing options for individuals and businesses, and are regularly used in real estate transactions. 

These loans are perfect for those looking for a fast financial solution to bridge the gap between a long-term loan, or to relieve an existing financial obligation. 

A bridge loan is also known as gap financing, swing loan, interim financing, or caveat loan.

Unlike mortgages, which are income-based loans with terms of up to 40-years and different lending specifications, bridging loans are usually redeemed between 6 to 18 months and are more suitable for those who need fast funding for property purchases and development.

To learn more about the differences between mortgages and bridging loans here.

What can a bridge loan be used for?

Bridging loans can be used for numerous reasons, but are generally used for real estate transactions such as:

  • Property renovations 
  • Purchasing a new investment property either on the open market or at auction
  • Redeeming an existing facility 

However, bridge loans have also been used to prevent repossession, pay tax bills and even by businesses that need to resolve temporary cash flow problems.

Our bridge loan case studies

With our market-leading bridging loan product, Velocity Bridging can help you secure a loan in record breaking time.

In a recent case, we advanced a £150,000 gross loan to a borrower based in Hampshire. They needed a loan urgently as essential repairs were required on one of their commercial properties.

A first charge was secured against the borrower’s new-build BTL flat in Portsmouth for a six-month term with an expected exit in three months. This loan was finalised in 3 working days, demonstrating how well the Velocity concept works.

We’ve helped investors and property developers across the country purchase auction properties and carry out essential maintenance to their residential and commercial properties.

How bridging loans work

Whether you apply for a bridging loan or an auction finance loan with Velocity Bridging, the process is the same:

  1. You call or send your enquiry to us
  2. We take a look at your enquiry and make an initial assessment of your case
  3. Within 2 hours, we’ll send your DIP and other documents
  4. Once you accept our offer, you return the documents to us
  5. Our solicitors get started working on the legal bits
  6. We make our credit and media checks, carry out the due diligence process and our lending director will inspect the property. We will also instruct a formal valuation if required.
  7. Once the legal and underwriting process completes, the deal is finalised and you receive your funds

How long does it take to get a bridge loan?

The industry average for a loan completion can be up to 50 days. 

With Velocity Bridging, because of our private funding line, slick processes and decision-makers, we can take your application from enquiry to completion in a 14-day timeframe for our auction finance loans, and just 3 days for our bridging loan.

How can I apply for a bridging loan?

Our bridge loan application process is quick and easy – perfect for those looking for a fast financial fix.

Simply contact us via telephone on 01704 339588, or through our bridging form application form and we’ll send a DIP (Decision in Principle) and other documents within 2 hours of receiving your enquiry. 

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