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What is a commercial bridging loan?
A commercial bridging loan is a type of short-term finance specifically designed for commercial property transactions. It helps bridge the financial gap between the purchase of a new property and the sale of an existing one or between the purchase of a new property and the securing of a more permanent financing source, such as a commercial mortgage. Commercial bridging loans are typically used for property-related purchases, renovations, or development projects. They are designed to provide temporary funding for individuals or businesses until they can secure a more permanent financing source. These loans are usually secured against the property being purchased or renovated, and the loan amount is based on the value of the property and the borrower’s ability to repay the loan.
How Commercial Bridging Loans Work?
Commercial bridging loans typically have a term of up to 18 months, although some lenders may offer longer terms. During this period, the borrower must only pay the loan’s interest, not the principal amount. This is similar to how interest is handled in residential bridging loans or development finance. The loan amount is usually based on the value of the commercial property being purchased or refinanced and the borrower’s ability to repay the loan.
Key Features of Commercial Bridging Loans
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Short-term finance
Commercial bridging loans are designed to provide short-term financing solutions for businesses, typically up to 18 months.
Interest-only payments
Borrowers only pay the interest on the loan during the term, with the principal amount usually repaid at the end of the term or earlier if the loan is repaid early.
Secured against commercial properties
The loan is secured against the commercial property being purchased or refinanced, providing the lender with collateral to ensure repayment.
Variable loan amounts
The loan amount can vary depending on the value of the property and the borrower’s financial situation.
Flexible repayment terms
Commercial bridging loans often offer more flexible repayment terms than traditional bank loans, which can help ease cash flow shortages.
No early repayment fees
Some lenders do not charge early repayment fees, which can be beneficial if the borrower can repay the loan earlier than anticipated.
Why Should You Use Expert Mortgage Broker for Your Bridging Loan?
Here’s why you should use an expert broker for your bridging loan:
- Expert guidance
- FCA regulated lenders
- Competitive Rates
- Hassle Free