Short-Term Bridging Finance: Your Options Explained

What Is Short Term Bridging Finance? 

Short term bridging finance is simply a type of short term loan that is designed to bridge the gap between an immediate need for capital and the availability of long-term funding. 

Typically lasting from a few weeks up to 12 months, these loans are ideal for time sensitive transactions where speed is crucial to securing the deal.

A short term property finance loan can be used in a wide variety of scenarios, including auction purchases, refinancing, or funding property improvements ahead of sale or rental. 

Unlike conventional loans, short-term bridging facilities prioritise speed and flexibility, allowing you to take advantage of opportunities that might otherwise be missed.

How to Determine What Short Term Bridging Finance Is Right for You

So, now that you know what a bridging loan actually is, how do you go about deciding which route is right for you?

Ultimately, the best type of short term bridging finance will depend on your property type, the reason for borrowing, your timescale, and your exit strategy. Investors purchasing at auction, for example, may require a product that releases funds within days, while those upgrading a property may prefer a loan with terms that align with their light refurbishment plans. 

It’s also important to consider whether you need a product with no valuation delays or even a day rate bridging finance option for ultra-short borrowing periods. 

With all of these variables in mind, take a look at what typical options there are below…

Bridging Finance: Your Options 

Commercial Bridging Finance

What is it?

Commercial bridging loans are short term loans secured against commercial or mixed-use properties. These loans are often provided by a commercial bridging lender with no valuation service to save time, particularly when speed is critical.

How can it be used?

Commercial bridging finance loans are suitable for acquiring commercial premises or even covering temporary cash flow needs until longer-term funding is arranged.

Residential Bridging Loans

What is it?

Simply put, these are the opposite of the aforementioned commercial loans in the sense of the type of property, but still boast the same benefits. Essentially, residential bridging loans are secured against properties intended for residential use. 

These bridging loans for commercial property equivalents in the residential sector allow borrowers to move quickly on purchases that may not qualify for traditional mortgage funding immediately.

How can it be used?

Residential bridging loans are particularly useful for property chain scenarios, buying unmortgageable properties, or refinancing while works are completed. 

A bridge to let loan for instance, is also a bridging arrangement that can help investors purchase, renovate, and then transition onto a long-term buy-to-let mortgage.

Day Rate Short-Term Bridging Finance

What is it?

Day rate bridging finance is a specialist product that not all lenders offer, it is unique and for this reason, extremely specified to those who are looking for the best deal on bridging. It allows you to borrow funds for only the exact period you need them, calculated daily rather than monthly.

How can it be used?

Ideal for very short transactions, this could include buying a property in cash to secure a fast deal, then refinancing within weeks. Because interest is only charged for the days the loan is active, it’s a cost-effective option for those who only need it for certain over a short period.

Residential Auction Property Finance

What is it?

A residential auction bridging loan is designed specifically for the tight completion timelines involved in property auctions, often just 28 days.

How can it be used?

These kinds of bridging loans are relatively straightforward as they’re designed for use at auction, allowing you to secure the property quickly without the delays of a standard mortgage. 

Once purchased, you can renovate, refinance, or sell as part of your investment strategy. Auction bridging loans are particularly useful when the property needs work before it’s eligible for a mortgage.

An Example of a Short Term Bridging Loan at Use

Still unsure if a bridging loan works for you as a viable option? Let’s look at an example scenario to explain how it works in action. 

Imagine an investor purchasing a mixed-use property at auction. The property requires some light refurbishment work before it can be refinanced onto a commercial mortgage. With just 28 days to complete, a commercial bridging lender with no valuation provides funds in under two weeks.

The investor then uses part of the loan to make essential improvements before refinancing within six months, thus paying interest only for the time the loan is in place.

So, what do you choose?

Your choice of short term property finance will depend on your timescale, property type, and long-term plans. A residential auction bridging loan may be best for urgent auction deadlines, while a day rate bridging finance product can suit ultra-short deals.

As laid out here, the choice is yours depending on your exact scenario, the good news is, regardless of your situation the options are vast so rest assured there is a product to suit your situation.

Talk to MS Lending Group for Short Term Bridging Finance Options 

At MS Lending Group, you’ll find a wide range of flexible short term bridging finance solutions, including all of the aforementioned major products. 

Designed to meet different property investment needs, we’re here to help, simply get in touch with our team to find out more about bridging loans and how they can help you succeed.