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Bridging Loans – What Are They?

There are regulated and unregulated bridging loans, to summarise:


A regulated bridging loan is borrowing that:

If you are looking to raise a first or second charge against a property that is the residence of the owner, then you will need a regulated bridging loan. A minimum of 40% of the property will need to be (either now or in the near future) lived in by the homeowner or their family.


An unregulated bridging loan is borrowing that:

If you are looking to purchase or reloan a secondary property, commercial asset or a buy-to-let investment, then you can use an unregulated bridging loan. These short-term loans can be for expanding property portfolios or investing in long-term capital gains.


But What Is A Bridging Loan?

Bridging loans are an interim or temporary financing option used by companies and individuals to assist them in their short-term position until a long-term financing option or solution can be arranged.

They are typically short-term under 12 months and involve higher rates of interest.


How Does A Bridging Loan Work?

Bridge financing "bridges" the gap between the time when a company or individual's money is set to run out and when they can expect to receive an infusion of funds later on. For example, this type of financing is most normally used to fulfill a company's short-term working capital needs, say until a large order is paid for by a customer or when a property is sold that has been delayed to enable you to purchase the next property sooner.


There are multiple ways that bridge financing can be arranged. Which option a company or individual uses will depend on the options available to them. A company in a relatively solid position that needs a bit of short-term help may have more options than say an individual in financial distress. Bridge financing options include debt, equity, and IPO bridge financing. The main one is debt bridging.



The Good News

If you need a regulated bridging loan, Penn Financial, authorised and regulated by the Financial Conduct Authority, can help. If you require an unregulated bridging loan then Penn Services (not regulated by the Financial Conduct Authority) can help you.


Whether you seek a regulated loan or an unregulated loan, Penn Group of Companies can help you achieve your goals all under the Group umbrella.


Always remember that when it comes to repayment, using your home as security for a bridging loan will put your home at risk and it may be repossessed if you are unable to keep up with payments on that loan.


Please contact us:

0333 344 3447


The information provided in this article is not intended to constitute professional advice and you should take full and comprehensive legal, accountancy or financial advice as appropriate on your individual circumstances by a fully qualified Solicitor, Accountant or Financial Advisor/Mortgage Broker before you embark on any course of action.



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