Bridging finance; the what, when and why…

At Together, we have been delivering finance for 50 years, using a wealth of expertise and knowledge to help our customers.

One key product we offer that is often overlooked is bridging finance. Although certainly becoming more mainstream, many property investors are yet to explore their benefits.

So, what is bridging finance and what can it be used for?

Jumping quickly on an opportunity

With a bridging loan, a buyer can quickly secure an opportunity, paying back the loan and interest once they sell other assets or receive expected income.

Additionally, having the ability to act as a cash buyer is advantageous when a vendor is prepared to sell at a discount for a quick sale.

Flipping for profit

When flipping a property, often buyers don’t need long term financial solutions like a mortgage. Many of our customers use bridging loans to finance purchase and renovations, complete the work within a specified timeframe and repay the loan once the upgraded property sells.

Repairing a broken chain

A property chain often relies on funds from the sale of an existing property to purchase the next home. When a buyer pulls out or delays a deal, it can be frustrating for the seller as they won’t be able to move until their sale completes.

Many customers use bridging loans to purchase their new home, repairing the chain break. It also gives them time to sell their existing property for the right price, without feeling pressured to sell quickly below market value.

Waiting on guaranteed funds to come in

Similar to sellers experiencing a chain break, there are individuals looking to buy – but are in income limbo. Their money might be in the form of an inheritance, divorce settlement, income payment or other investment asset that they are expecting.

This could take several months, but circumstances may mean individuals need to quickly move to a new property. Bridging loans allow them to buy the property now, repaying the loan after receiving the expected funds or securing longer-term finance.

Improving the energy efficiency of a property

Bridging loans can be used for property improvements, such as adding wall and ceiling insulation or installing heat pumps or solar panels, raising their EPC rating and reducing energy costs. A high EPC rating could add considerable value to a property and attract potential buyers.

Refinancing and managing cash flow

Bridging loans can be used if an individual or business has existing finance that needs to be quickly repaid. For example, the existing finance could be about to run out before repayment is possible, resulting in costly penalties.

Renovating a rental

Using bridging loans to purchase and renovate rental properties serves two main purposes. Firstly, landlords can quickly make sure their property is ready for tenants to move in, generating income. This also allows landlords to address problems lenders may have such as structural issues, making it easier to get a long term Buy to Let mortgage at a lower rate.

To find out more about how we can help, contact the Together team at 0333 060 1789 or email ihs@togethermoney.com

Eddie – 29th March 2025. (Text and images supplied by April at Together).