bridging finance
Short-term secured lending used to buy and refurbish property that a mortgage will not lend against.
A property without a kitchen or bathroom, or with a short lease or structural problems, is usually unmortgageable. Bridging lenders will lend against it anyway, at a higher rate and for a short term, on the expectation that the works make it mortgageable.
The facility typically advances against the purchase price plus a tranche for the works, drawn in stages. Interest is charged on what has been drawn, which is why charging day-one interest on the whole works budget overstates the cost of every phased project.
Where this comes up
- Net advance: what a bridging facility really releases
A facility is not a cash sum. Where interest is retained it is deducted at drawdown, so the net advance is smaller than the headline. A capital stack…
- Stamp duty and the additional dwelling surcharge
A company pays the additional dwelling surcharge from the first pound, with no starting threshold. On a typical purchase that is thousands, before anything…