It’s probably true to say that the majority of people using bridging finance are doing so for the first time, and probably won’t use it again.
That’s not to say there is anything wrong with the bridging finance industry, but it’s relevant because it means that customers and brokers are unlikely to be familiar with the types of deals available.
If nothing else, it is useful to understand that bridging finance lenders are unregulated, this does not mean that they are all sharks, in fact there are plenty of very professional operators in the sector. But it is absolutely vital to understand that any private individual with a consumer credit license can lend money, and some of them are not very nice.
Look out for lenders and brokers that are members of an umbrella organisation, such as the National Association of Commercial Finance Brokers. Also be prepared to use a commercial finance broker. Mainstream financial advisers do not generally have access to all the specialist lenders and will most likely resort to referring your case to a panel.
Before starting your search be absolutely clear about what you want. Don’t just tell your broker or lender that you want to borrow £75,000 over 4 months. Tell them what the project is all about, why you are doing it and why you know you can repay the money. The clearer your instruction the better deal you are likely to get.
Bridging Finance Deals
- Lancashire Mortgage corporation’s auction bridge – This is an auction purchase product which is ideal properties under £150,000. There are special arrangements for valuations
- Bridgebank Capital’s Renov8 product – Ideal for property development or refurbishment. Better deals for people with a proven track record in property development.
- Lowry Capital’s express refurbishment product – may lend on a property shell and won’t look at the current state of the property. Again, ideal for property developers.
- Regentsmead – well established lender, and one that does not take a one-size fits all approach.
- Cheval – Been around for a long time and offers a wide range of products. Can be a bit picky but a very good place to start.
This may sound odd. But don’t focus on interest rates. It is far cheaper in the long run to get the right deal first time. Badly fitting bridging finance can be really expensive if things go wrong.