Property finance
Business Bridging Finance for UK Limited Companies
Bridging finance is a short-term loan secured on property. Limited companies use it to buy business or investment property quickly, to cover a gap until a sale or longer-term finance is in place, or to fund lighter work before a property is let or sold. Because it’s designed to be short, the lender’s first question is usually how the loan will be repaid.
This guide covers bridging for business and investment property owned by a company. It doesn’t cover bridging loans secured on a home you or your family live in.
Wize Finance can help your limited company see whether bridging finance, or another type of finance, may suit what you’re planning.
Share the property, the amount and how you plan to repay, such as a sale or refinance. The team reviews your enquiry and discusses it with you.
How bridging finance works
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The company identifies the property and the gap.
It might be a purchase, a refinance, or a period of work before the property can be let or sold.
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The lender looks at the property and the exit.
It instructs a valuation and asks how the loan will be repaid.
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A legal charge is registered
over the property, and sometimes over other property the company owns as additional security.
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Interest is handled in one of three ways:
paid monthly, added to the loan (rolled up), or set aside from the loan at the start (retained). Each affects how much you receive and how much you repay.
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The loan is repaid at the exit,
by selling the property or refinancing onto longer-term finance.
Start with the exit
Every bridging loan needs a credible way out. Lenders usually want to understand the exit before they agree to lend.
A bridge is only as strong as the exit at the other end.
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Sale
- How it repays the bridge
- The property is sold and the loan is repaid from the proceeds.
- What a lender may want to see
- The property’s value, the market for it, and a realistic sale plan.
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Refinance onto a commercial mortgage
- How it repays the bridge
- Longer-term finance replaces the bridge once the property qualifies.
- What a lender may want to see
- That the property and the company are likely to meet a long-term lender’s criteria. → Commercial Mortgages
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Refinance onto investment finance
- How it repays the bridge
- A long-term investment loan replaces the bridge once the property is let.
- What a lender may want to see
- Evidence of the expected rent and the company’s investment plans. → Property Investment Finance
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Other funds arriving
- How it repays the bridge
- Money due to the company, such as the sale of another asset, repays the loan.
- What a lender may want to see
- Evidence of when, and how certain, the money is.
What companies use bridging for
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Buying before long-term finance is ready. Completing a purchase when a commercial or investment mortgage will take longer to arrange.
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Buying at auction. Auction purchases usually have a fixed completion deadline set by the auction terms, which is why bridging is often used. Auction finance has its own guide.
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Light work before letting or selling. Cosmetic or non-structural improvements that make a property lettable or sellable, followed by a sale or refinance. Major structural work or a change of use is usually funded with Development Finance instead.
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A short gap in a business property deal. For example, buying new premises before the sale of the old ones completes.
What bridging lenders look at
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The exit. How, and when, the loan will be repaid.
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The property. Its value now and, where work is planned, after the work, confirmed by the lender’s valuation.
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The plan. What the money is for, and whether the timetable is realistic.
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The company and its directors. Experience, existing borrowing and credit history.
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Security and guarantees. A charge over the property, and possibly over other property. Some lenders may also ask directors for a personal guarantee, which is a separate commitment.
Know your exit?
Tell us about the property and the gap you need to cover, and see which types of finance may suit it.
Costs and risks to understand
What to compare:
- The interest rate, and how interest is handled (monthly, rolled up or retained)
- Arrangement, valuation, legal and exit fees
- How long the loan runs, and what happens if it overruns
- What the security covers, and any personal guarantee requested
- The total amount repayable at the end, not just the rate
Bridging finance FAQs
What is bridging finance?
It’s a short-term loan secured on property, used to cover a gap until the property is sold or the borrowing is replaced with longer-term finance.
What is an exit strategy for a bridging loan?
It’s how the loan will be repaid at the end, usually by selling the property or refinancing onto a longer-term loan. Lenders look closely at how credible it is.
What’s the difference between a commercial bridging loan and a regulated bridging loan?
Some bridging loans are regulated, for example where an individual borrows against property that is, or will be, used as a home. Wize Finance doesn’t arrange regulated or home-secured bridging. This guide covers bridging for business and investment property owned by a company, which generally isn’t regulated.
How is interest paid on a bridging loan?
Interest may be paid monthly, added to the loan (rolled up), or deducted from the loan at the start (retained). Each changes how much you receive and how much you repay.
Can bridging finance be used to buy at auction?
Often, yes. Auction purchases usually have a fixed completion deadline, and bridging can help a company complete while longer-term finance is arranged.
Can I use bridging finance for refurbishment?
For lighter, non-structural work, often yes. Major structural work or a change of use is usually funded with development finance instead.
Do you cover bridging loans on my home?
No. Wize Finance doesn’t arrange bridging loans secured on a home you or your family live in.
How Wize Finance works
Wize Finance uses the information you give us to understand the property and the gap you need to cover. Where appropriate, it introduces the business to a finance provider, which assesses the application and makes the decision.
After you submit your details, the Wize Finance team reviews your enquiry and contacts you to discuss your funding needs and next steps. Where appropriate, your details can then be shared with a suitable funding provider.
It helps to tell us: the property and its use, what the money is for, how long you need it, and how you plan to repay it.
- The business
- Wize Finance understands the property and the gap you need to cover
- Finance provider assesses the application and makes the decision
Ready to plan your bridge?
Tell us about your company and the property, and see which types of finance may suit it.