The Changing Face of Bridging Finance

Bridging Finance has long been thought of as an undesirable quick fix financial solution. Traditiona

Bridging Finance has long been thought of as an undesirable quick fix financial solution. Traditionally undertaken as a last resort to ‘bridge the gap’ between a property transaction deadline and the main line of credit being secured, Bridging Finance used to be a dirty word.


However, times are changing, as they are now part of everyday financial options. Bridging loans have been growing in popularity for the past number of years as its application diversifies.

What is a bridging loan?

Bridging Finance is a short-term funding option, which can generally be arranged quicker than a conventional mortgage. Available to both individuals and businesses for almost any purpose, a bridging loan can be used until long-term funding is acquired (refinance) or upon the sale of a property. This source of funding can also be secured on properties that may not be eligible for traditional mortgage finance.

When could Bridging Finance be the solution?

Clients looking for a bridging loan can use them for a variety of purposes including:

  • Auction purchases – auction houses require quick completions for property purchases, so the client can usually rely on the speed of a specialist bridging lender to promptly secure funding for the initial deposit percentage and remaining amount.
  • Chain break when a client is involved in a property chain that has fallen through due to one member of the chain withdrawing, bridging finance can be used to salvage the rest of the chain and enable them to still progress with the purchase of their new property.
  • Capital raise – using existing land or property as security against a bridging loan (by way of a First or Second Charge), the client can raise capital for almost any loan purpose in a short timeframe.
  • Fast property purchase – many landlords/investors are progressively using short-term finance to quickly turnaround transactions. Securing a bridging loan in a matter of days can make all the difference for purchasers to act quickly when finding a suitable property.


Property professionals, landlords, investors and developers make up the bulk of those utilising bridging loans as a practical solution for raising capital quickly for many different situations. Increasing numbers of borrowers are greatly appreciating the flexibility that Bridging Finance presents them to benefit their property transactions and their businesses.

Both residential and commercial properties can benefit from a quick cash injection using this fast, flexible and secured funding option.

Combining speed with flexibility, a Bridging Loan can be used to fund a plethora of situations – typically assisting in portfolio growth, property acquisition, conversion and development. They can be vital in facilitating a property purchase that otherwise would not be possible.

With Bridging Finance being a short-term loan (usually 18 months or less), rates are generally expressed as the rate per month; meaning that it can work out more expensive than long-term finance options. Therefore, it’s important that your client has a clearly defined exit strategy in place when taking out a bridging loan – a key area for specialist bridging lenders when assessing cases.

A Change in Landscape

Use in Bridge to Let…

The buy-to-let market is increasingly turning to Bridging Finance in order to develop both new and existing portfolios.

Clients that are looking to purchase property in need of renovation at a steal (usually at auction) will need an extra boost to their cash flow in order to make the building habitable for tenants. In these circumstances, Bridging Finance enables investors to buy an un-mortgageable property and renovate the interior of the property quickly prior to letting and securing long-term funding on a buy-to-let mortgage; thus increasing yield.

With the impending PRA changes, landlords could stand to see a serious turn on investment in properties purchased this year, despite the April tax changes.

Download your free UK Tax Changes eGuide here
Use to fund stage development…

There is also a growing interest in Bridging Finance being used to aid development loans. Development loans are released in stages, based on building criteria agreed within each loan’s terms.

So where do bridging loans come into this?

Bridging loans are at the heart of what property developers use to finance their projects. Using Bridging Finance for their development projects enables your client to release funds from increased equity whilst refurbished properties are refinanced or sold, so that they can move onto another project.

Gaining planning permission is paramount when your client is considering a development project, however securing this can be a long and arduous task. Bridging Finance can provide your customer with a quick, short-term solution to secure the planning permission they need against the land or property. As soon as this is obtained, the land or property instantly increases in value; giving your client the option to sell the land or property at a profit without having to carry out any refurbishment works.

If your client is a property developer or investor, then you may be wondering whether a bridging loan or development finance is best suited. It fundamentally all comes down to how extensive the project will be. To distinguish what type of finance your client requires for their circumstances, it’s useful to see which of the below groups their project fits within:
 

  • Light refurbishment – no planning permission or building regulations are required and no change to the overall use of the property. It includes aesthetic rather than structural changes i.e. new kitchen, rewiring, decorating, new windows.
  • Heavy refurbishment or renovations – in addition to aesthetic changes, this would include structural work where planning permission and building regulations are necessary i.e. moving internal walls, adding an extension, loft conversion.
  • Ground-up development – involving the most work, this is usually starting with a plot of land to build upon or a very heavy refurbishment or conversion (where nothing remains other than stonework).


Bridging finance can be secured for clients with projects fitting within the above ‘light refurbishment’ and ‘heavy refurbishment/renovations’ categories. Your clients can use short-term funding to get the necessary work done for the property to be in a mortgageable/ lettable state, after which they can choose to sell the property or refinance and move to a buy-to-let mortgage. A huge plus point with a Bridge to Let is that it allows property investors to withdraw capital on the completed project, freeing them to invest in their next project.


If your client’s project fits in with the third ‘ground-up development’ category above, then their circumstances would align more with development finance, not a bridge.

You may also have some clients that require finance to purchase a single dwelling property with the aim of converting it into an HMO (House in Multiple Occupation). In these specialist cases, their main funding option will be Bridging Finance - due to the quick turnaround required to transform the property (with the necessary refurbishment works) into single accommodation units with shared facilities and communal areas.

If you have a landlord looking to venture into the HMO market or an experienced investor looking to expand their property portfolio with an HMO, then Crystal Specialist Finance can help! We've compiled your essential go-to eGuide for everything you need to know about advis

Bridging Finance has long been thought of as an undesirable quick fix financial solution. Traditionally undertaken as a last resort to ‘bridge the gap’ between a property transaction deadline and the main line of credit being secured, Bridging Finance used to be a dirty word.


However, times are changing, as they are now part of everyday financial options. Bridging loans have been growing in popularity for the past number of years as its application diversifies.

What is a bridging loan?

Bridging Finance is a short-term funding option, which can generally be arranged quicker than a conventional mortgage. Available to both individuals and businesses for almost any purpose, a bridging loan can be used until long-term funding is acquired (refinance) or upon the sale of a property. This source of funding can also be secured on properties that may not be eligible for traditional mortgage finance.

When could Bridging Finance be the solution?

Clients looking for a bridging loan can use them for a variety of purposes including:

  • Auction purchases – auction houses require quick completions for property purchases, so the client can usually rely on the speed of a specialist bridging lender to promptly secure funding for the initial deposit percentage and remaining amount.
  • Chain break – when a client is involved in a property chain that has fallen through due to one member of the chain withdrawing, bridging finance can be used to salvage the rest of the chain and enable them to still progress with the purchase of their new property.
  • Capital raise – using existing land or property as security against a bridging loan (by way of a First or Second Charge), the client can raise capital for almost any loan purpose in a short timeframe.
  • Fast property purchase – many landlords/investors are progressively using short-term finance to quickly turnaround transactions. Securing a bridging loan in a matter of days can make all the difference for purchasers to act quickly when finding a suitable property.


Property professionals, landlords, investors and developers make up the bulk of those utilising bridging loans as a practical solution for raising capital quickly for many different situations. Increasing numbers of borrowers are greatly appreciating the flexibility that Bridging Finance presents them to benefit their property transactions and their businesses.

Both residential and commercial properties can benefit from a quick cash injection using this fast, flexible and secured funding option.

Combining speed with flexibility, a Bridging Loan can be used to fund a plethora of situations – typically assisting in portfolio growth, property acquisition, conversion and development. They can be vital in facilitating a property purchase that otherwise would not be possible.

With Bridging Finance being a short-term loan (usually 18 months or less), rates are generally expressed as the rate per month; meaning that it can work out more expensive than long-term finance options. Therefore, it’s important that your client has a clearly defined exit strategy in place when taking out a bridging loan – a key area for specialist bridging lenders when assessing cases.

A Change in Landscape

Use in Bridge to Let…

The buy-to-let market is increasingly turning to Bridging Finance in order to develop both new and existing portfolios.

Clients that are looking to purchase property in need of renovation at a steal (usually at auction) will need an extra boost to their cash flow in order to make the building habitable for tenants. In these circumstances, Bridging Finance enables investors to buy an un-mortgageable property and renovate the interior of the property quickly prior to letting and securing long-term funding on a buy-to-let mortgage; thus increasing yield.

With the impending PRA changes, landlords could stand to see a serious turn on investment in properties purchased this year, despite the April tax changes.

Download your free UK Tax Changes eGuide here
Use to fund stage development…

There is also a growing interest in Bridging Finance being used to aid development loans. Development loans are released in stages, based on building criteria agreed within each loan’s terms.

So where do bridging loans come into this?

Bridging loans are at the heart of what property developers use to finance their projects. Using Bridging Finance for their development projects enables your client to release funds from increased equity whilst refurbished properties are refinanced or sold, so that they can move onto another project.

Gaining planning permission is paramount when your client is considering a development project, however securing this can be a long and arduous task. Bridging Finance can provide your customer with a quick, short-term solution to secure the planning permission they need against the land or property. As soon as this is obtained, the land or property instantly increases in value; giving your client the option to sell the land or property at a profit without having to carry out any refurbishment works.

If your client is a property developer or investor, then you may be wondering whether a bridging loan or development finance is best suited. It fundamentally all comes down to how extensive the project will be. To distinguish what type of finance your client requires for their circumstances, it’s useful to see which of the below groups their project fits within:
 

  • Light refurbishment – no planning permission or building regulations are required and no change to the overall use of the property. It includes aesthetic rather than structural changes i.e. new kitchen, rewiring, decorating, new windows.
  • Heavy refurbishment or renovations – in addition to aesthetic changes, this would include structural work where planning permission and building regulations are necessary i.e. moving internal walls, adding an extension, loft conversion.
  • Ground-up development – involving the most work, this is usually starting with a plot of land to build upon or a very heavy refurbishment or conversion (where nothing remains other than stonework).


Bridging finance can be secured for clients with projects fitting within the above ‘light refurbishment’ and ‘heavy refurbishment/renovations’ categories. Your clients can use short-term funding to get the necessary work done for the property to be in a mortgageable/ lettable state, after which they can choose to sell the property or refinance and move to a buy-to-let mortgage. A huge plus point with a Bridge to Let is that it allows property investors to withdraw capital on the completed project, freeing them to invest in their next project.


If your client’s project fits in with the third ‘ground-up development’ category above, then their circumstances would align more with development finance, not a bridge.

You may also have some clients that require finance to purchase a single dwelling property with the aim of converting it into an HMO (House in Multiple Occupation). In these specialist cases, their main funding option will be Bridging Finance - due to the quick turnaround required to transform the property (with the necessary refurbishment works) into single accommodation units with shared facilities and communal areas.

If you have a landlord looking to venture into the HMO market or an experienced investor looking to expand their property portfolio with an HMO, then Crystal Specialist Finance can help! We've compiled your essential go-to eGuide for everything you need to know about advising your clients on purchasing an HMO or converting a property into an HMO. Get your free copy by clicking the link below.

Download your free HMO eGuide here
So if you’re seeing an increase in bridging cases on your desk, you know where to turn! 

By aligning yourself with the recent tax changes and approaching PRA rules, then you’ll be in the best position to assist with placing your customers’ situation with the best product. Our product panel is comprehensive and covers a range of terms, circumstances and property types. So if you find yourself unsure of what funding option is best, then let us help you to find your client the perfect short-term finance solution

rty into an HMO. Get your free copy by clicking the link below.

Download your free HMO eGuide here
So if you’re seeing an increase in bridging cases on your desk, you know where to turn! 

By aligning yourself with the recent tax changes and approaching PRA rules, then you’ll be in the best position to assist with placing your customers’ situation with the best product. Our product panel is comprehensive and covers a range of terms, circumstances and property types. So if you find yourself unsure of what funding option is best, then let us help you to find your client the perfect short-term finance solution

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Crystal Specialist Finance is one of the most well respected and fastest growing finance distributors in the UK.

We offer specific expert advice, products, and award-winning service to brokers and networks across five core markets: Commercial Finance, Bridging Loans, Development Funding, Second Charge Loans and Specialist Mortgages.

Operating across England, Scotland and Wales, we have access to over 70 lenders, including exclusive lines.

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