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Bridge financing for your customers


“Le Marché” bridge financing

Bridge financing has evolved and grown in recent years to become an effective solution for sophisticated real estate investors looking to maximize an asset’s potential by moving quickly. More recently, the pandemic – along with the first nationwide foreclosure – naturally caused the UK property market to slow down, but as it reopened and adjusted to the new normal, we saw a significant pick-up in the number of transactions backed by the bridge financing.

Recent data from the Association of Short-Term Lenders (ASTL) indicated that transition completions were down to £ 2.88bn in 2020, from £ 3.99bn in 2019, at the Conversely, transition requests actually increased by over 11%. The positive development of claims started in the third quarter up 25.7% and continued to grow at a steady pace in the fourth quarter with an increase of 39.1% compared to the same period in 2019. These figures are a clear indication of the recovery in the real estate market, as investors reacted. positively to the progress of vaccine deployment and the lifting of restrictions. Based on current trends we expect bridges to strengthen and given the current trajectory it is estimated that the market could grow to a size of £ 14 billion to £ 15 billion by 2025.

Flexibility in uncertain times

One of the advantages that appeals to investors in this market is the flexibility it provides, which is particularly useful in times of uncertainty. With some properties staying on the market longer, the combination can provide the vital capital that investors need to seize additional opportunities to expand their portfolios, or those who need more time to achieve maximum value by selling on a safer market.

Flexibility is crucial for many investors, allowing them to react quickly to market opportunities, and the product itself offers this as a short-term solution with terms ranging from 1 month to 36 months. In order to find the right solution, it is essential to understand the customer’s needs and requirements, as well as their strategy, as products vary widely.

The myths

Transition financing is expensive and involves excessive fees and charges?
NO. Transition rates are low and fees are not excessive, with products available without exit fees or ERCs and very accessible from banks and lenders active in this space.

If bridge funding is / has been used, there must be a problem?
In recent years, investors have used the bridge as a smart way to quickly access funds to support their strategy.

Lack of transparency
With any product, make sure that you and your client are aware of all fees and charges, but everything a lender provides should be clear and transparent with no fees or hidden charges.

It’s too complicated – I don’t understand
Bridging is a specialized loan and with a greater number of investors having better access to the product, call on a specialized lender or a conditioner with the expertise to accompany you throughout your client’s real estate journey.

Transition should be seen as a strategic way to leverage investments for any owner looking to grow their real estate portfolio or business. Property values ​​appear positive and demand from tenants is increasing. Given the strain on the rental property supply, now is the time for investors to use the bridge to take advantage and capitalize on opportunities as they arise. The ability to react quickly is key. With competition among lenders at an all time high putting downward pressure on interest rates, the bridge has become more accessible and affordable and is now considered standard practice for sophisticated investors looking to maximize returns. Ensuring that a clear and viable exit is the key factor when considering bridging financing – this can be through selling or refinancing into a long-term solution.

What is the difference between regulated and unregulated bridging?

  • Regulated bridging loans are regulated by the Financial Conduct Authority (FCA) and are secured by property that is currently or will soon be occupied by the borrower or an immediate family member.
  • Unregulated bridging loans are used for the acquisition of property for commercial use only and are not regulated.

What can bridge financing be used for?

The key is to understand the needs of investors and the considerations to be taken into account. For example, when buying at auction, investors looking to grow their portfolio are often pressed for time to act quickly, but at the same time they need to ensure that the bridging funding is in place so that they can make an acquisition.

Other scenarios
Refurbishment – This can be “light” or “heavy” with lender definitions varying on how they apply their criteria:

  • Light renovation is usually anything that is not structural and would normally be a new decoration i.e. new kitchen and new bathrooms with the work completed within 6 months.
  • Heavy renovation – This is used by experienced investors to create and add value to an asset. This is another area where clients can maximize asset potential by creating HMOs, commercial to residential conversions and can range from high street units to large office conversions. Don’t assume by default that it’s all about development finance or that there are no options for your clients – there are!

Unregulated bypass uses

  • Developer output
  • Increase in capital
  • Light renovation
  • Auction purchases
  • Planning savings
  • Heavy renovation
  • HMO conversions
  • Multi-unit blocks
  • Commercial to residential
  • Renovation of a detached house

Regulated bridging uses

  • Chain break
  • Light renovation
  • Capital increase on the current property to finance the subsequent purchase of the property
  • Downsizing
  • Auction purchase
  • Divorce settlement


For a professional owner or investor, knowing where you stand and having a clear solution in place from day one allows you to plan your next steps. Whether the goal is to rent the property or sell it to raise funds for your next project, the cash flow benefits of the transition are clear. Look for a specialist lender who will work closely with their brokers to gain a thorough understanding of the client’s immediate and long-term priorities in order to find an effective transition solution. The market has seen a significant increase in the number of clients looking for a bridging loan, and it is the role (and responsibility) of the lender and broker to ensure that clients feel supported from the start, by working with them to understand the potential of the future. .

Bridge financing is not a solution to rule out and should always be considered for clients looking to maximize opportunities. The market is constantly changing, and although gateways are becoming more and more common, they still retain a specialist advantage.

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