Commercial Bridging Loans Guide
Thinking of a commercial bridging loan for your property? Learn how with FC Funding.
A Guide to Commercial Bridging Loans
Considered a very feasible option for when you have a gap in financing that needs to be dealt with quickly, commercial bridging loans are ideal for securing a property quickly for example at auction, where you would usually have 28 days to complete the purchase.
As specialists in commercial bridging & development finance, read on to learn all about commercial bridging loans, and how as one of the UK’s leading commercial mortgage brokers, FC Funding can find the right commercial mortgage/bridging loan solution for you.
Enquire today to discuss your commercial bridging loan options.
What is a commercial bridging loan?
A commercial mortgage bridge loan is actually the combination of two separate products – a bridging loan and a business mortgage – to assist with the purchase of a commercial property or plot of land.
The bridging loan serves the short-term purpose of assisting with the initial property purchase, whereas a commercial mortgage helps with the longer-term financing.
What can a commercial bridge loan be used for?
Unmortgageable properties
Bridging finance providers can be more flexible when it comes to offering you a mortgage for a building that is in disrepair. One option is to purchase such a property with a bridging loan, carry out the repairs, then take out a commercial mortgage based on its rise in value as an exit strategy.
Property auctions
As a bridging loan gives you funds to the secure a property, they give you a viable method of purchasing a commercial property under the hammer.
Chain breaks
Commercial property owners may find themselves in the predicament of having to sell a property before they can buy a new one. If the sale of their existing building falls through, this will disrupt the property chain.
Fortunately, with a bridging loan, the chain can be kept alive, and the exit strategy could be selling the previous property or refinancing funds onto a commercial mortgage for the new one.
How can I be eligible for a commercial bridge mortgage?
Whilst you can use separate providers for both aspects of the commercial bridging mortgage, to qualify for this loan you will need to meet certain eligibility criteria. We recommend contacting us for advice on how to best assess your commercial property funding options.
Whilst products are offered based on each individual applicant’s financial and commercial status, most lenders prefer you to have:
A strong exit strategy
For commercial bridge mortgage loans, the exit strategy is normally to refinance onto a commercial mortgage or a BTL mortgage. The bridging provider will want evidence to show that the mortgage loan can be lined up.
A profitable business with relevant and significant industry experience
You would also be expected to have a good track record in your operating industry to help persuade the lender that you can achieve your business plans, and can thereby afford the mortgage repayments. A lender may ask to see such plans to better understand your future profit projections.
An exceptional credit score
A good credit score will indicate to a lender that you’re a low risk prospect.
Good deposit/security options
Putting down more than the minimum down payment amount can also lower the level or risk. What’s more, 100% loan to value ratio deals are possible if you can put down extra security and collateral (i.e. another property).
Commercial Bridge Loans FAQs
Commercial bridging loans deposit requirements are typically higher than traditional mortgages – you can expect to put a down payment of between 30-35%
Typically, you can borrow up to 70% of your loan-to-value.
Advantages of taking out a commercial bridging loan include:
- It gives you the opportunity to buy a new property before you’ve sold your current one
- They present a helpful short-term funding solution during periods of uncertainty
- They are usually quicker to arrange than a more conventional mortgage, and can be more flexible
- There is also the possibility of not having to make monthly payments for the first few months as interest is retained
- There’s potential for interest-only payments, or even payments that can be rolled up until you sell
Yes – they are secured against the asset you are looking to purchase/ refinance. Commercial bridging loans are usually repaid within 1 – 3 years’ time.
FC Funding are experts in Remortgaging Commercial Properties
Whether you’re looking for commercial mortgages, buy to let mortgages, bridging loans or investment mortgages, FC Funding are the broker for you. With years of experience in all areas of commercial lending and facilities.
With our knowledge of the financial sector, we can help you evaluate the various commercial property remortgage options available, so that you choose the right funding option for your property.
For more information, please feel free to get in touch via our website or give us a call on 01202 937880.
