Bridging and Auction Finance

Also known as short term lending, bridging finance is typically used to ‘bridge’ a short-term requirement.

When comparing the interest rates charged on a bridge vs a conventional mortgage, bridging finance can often appear expensive. However, when used under the correct circumstances a ‘Bridge’ can be a very cost effective and invaluable tool.

If it’s your first time buying a property from auction or you’re a seasoned professional, there are two things of paramount importance:

Speed – typically an auction contract will require completion within 20 workings days so it’s essential to have all your ducks in a row before the gavel falls.

Exit – Arguably this is the most important factor; how will you repay the bridging. We will always talk to you about keeping your options open which is why having multiple exit strategies is vital.

There are two main types of bridging finance:

• ‘Regulated’ - Secured against a property resided in by the applicant or a close family member,
• ‘Unregulated’ – Almost anything else!

An unregulated bridge has a wide variety of uses:

• Securing against an unmortgagable property e.g. a property with no kitchen and/or bathroom currently fitted,
• Securing against a property which is about to be refurbished,
• Securing against land prior to obtaining planning permission,
• Purchasing a property quickly (within 1-4 weeks) e.g. auction purchases

A bridge normally has no early exit penalties, so whilst the interest rate may sound expensive, if used over a short term, and for the correct reasons, they can often be the perfect solution.