In today’s finance marketplace there are a wealth of specialist property lenders providing short-term finance in its various guises. Such forms of finance used to be known as “alternative”, but given their use is now much more commonplace, they are widely acknowledged as being accepted and utilised by investors, developers and business people on a regular basis. Fast and flexible funding is now available through a vast range of lenders.
Positive Commercial Finance is amongst the UK’s leading commercial finance brokers, and our primary focus is and always has been on short term finance such as Development Finance and Bridging Finance.
So, what type of Property loan do I need?
A good starting point to establish what “type” of loan you need, is to consider what the loan funds are going to be used for. If you require a loan to build property, then Property Development Finance is probably the most relevant. However, if it is not a “ground-up” development, or involving a significant amount of works (which might require Planning Permission, for example), then a Bridging loan might suffice. Bridging lenders can provide loans for refurbishment projects and conversions (amongst other things), so there is an overlap of both these types of loans.
Another important factor, is how long you need the money for. There is no question that short-term property finance is typically more expensive than a conventional mortgage, and as such it is used for a specific purpose, with an exit strategy in mind which can repay the loan, within a short timeframe (typically up to 18 or 24 months).
If the proposed use of funds, or length of term required does not make it obvious as to what type of loan you need, other factors to consider might be the circumstances of the purchase (including an auction purchase, a “fast” completion, or a Below Market Value purchase), or the position and profile of the borrower (often impaired credit can mean you need to take a bridging loan to allow time to pass prior to refinancing to a mainstream mortgage).
Once we throw all these factors into a “pot”, we can quickly narrow down the potential options from the most significant and appropriate of our lender partners. Our depth of experience gives us the confidence to quote quickly, and more importantly – reliably.
Bridging Finance used to be considered as an alternative method of finance, only for seasoned investors and property professionals, and only available from a small number of very specialist lenders. Today, it is much more mainstream. This is evidenced by the number of short-term lenders in the marketplace, many of which are backed by, or affiliated with today’s banks.