Bridging finance explained

11th March, 2022

Bridging finance is a short-term loan which can be secured against residential property, commercial property, or land. CA bridging finance is suitable for property investors and developers who need funding quickly. Incorporated in 1982, we have spent decades refining our service driven offering of unregulated first charge loans for professional property traders, investors and developers. We do not lend to owner-occupiers or on properties where a family member does or will reside.

When to use bridging finance

Bridging finance can be used for:

  • The purchase of properties which have potential for future development. CA also has bespoke products should funding ultimately be required to develop the property.
  • Auction purchases. You can contact CA before the auction. Our experienced Lending Managers can offer you a quick decision in principle and provide you with Heads of Terms prior to the auction.
  • Properties that need refurbishment or redevelopment prior to onward sale or to be retained as an investment.
  • Properties that are already owned and capital is required, to repay another lender, for a lease extension, or to provide funds for further investments.
  • Properties/land with planning permission for a residential or mixed use scheme. CA also has bespoke products should funding ultimately be required to develop the property.
  • Commercial property subject to meeting CA criteria.

How bridging finance works

To apply, you will need to call us on 020 3857 6350 to speak to one of our lenders to discuss your requirements or email us on info@acceptances.co.uk

If the requirement meets our lending criteria, we will start the bridging loan process:

  • Initial application
  • Heads of Terms
  • Due diligence, KYC (know your customer) and account opening formalities
  • Panel valuer quotes
  • If the applicant decides to proceed, solicitors and valuers are instructed (loans remain subject to formal approval at this stage)
  • Formal approval process
  • Once approved, we issue the formal letter of offer
  • Completion
  • Build float advances (development finance)
  • Repayment/Renewal

Bridging loan eligibility

  • Our loans are only available to professional property investors and developers including private individuals, partnerships and limited companies.
  • We do not lend to owner-occupiers or on properties where a family member does or will reside.
  • We will consider your property-related experience and will expect you to have completed similar projects in the past.
  • We will need to be satisfied that there is a realistic exit strategy be it the sale of a completed development or long-term refinance.

Our bridging loan criteria

CA requires a legal first charge over the property as security. If the borrower is to be a company, we will need Personal Guarantees from the shareholders and a Debenture.

To determine if a bridging loan is a suitable funding option, we will consider the following:

  • The credit profile of the prospective borrower
  • The amount required and the anticipated loan to value
  • The applicants’ experience
  • The type of asset
  • The location of the property
  • The viability of the project
  • The exit strategy
  • The equity contribution
  • The identity of the tenant/s and lease terms, if applicable
  • If the applicant or a family member resides or plans to live in the property, we are unable to lend in these circumstances

If the bridging application is for a property or land with planning, we will also require:

  • A copy of the planning permission
  • Site plans and elevations
  • A breakdown of build costs
  • Evidence that you have completed similar projects in the past

If the application is for a tenanted residential or commercial property, we will also require the following information:

  • Property income
  • Length, unexpired term and type of lease/s
  • Additionally, for commercial properties, the covenant of the tenant/s

Bridging finance for developers

Bridging loans can be used to acquire properties with planning permission, or which have planning potential. CA can also offer funding to assist with the cost of the property development. It will be structured to include 100% of the build costs, professional fees and any s.106 and CIL contributions, plus an amount to cover interest. The build float is released as works progress. We will appoint a project surveyor to monitor the works. They will produce certificates against which we will release funds. The facility will also contain an allowance for these professional fees.

For larger and more complex developments, we may need to commission a ‘pre-PMS (Project Monitoring Surveyor’s) report’. This is to satisfy us that the proposed build budget is sufficient to complete the development.

If this report is required, the project monitoring surveyor will be instructed at the same time as we commission the valuation report. We will obtain quotes from our panel firms and will collect the fee from the applicant before confirming the instruction.

Start the ball rolling for your bridging loan right now

Apply now by telephoning 020 3857 6350 or emailing us at info@acceptances.co.uk and speak to a member of our lending team today.

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