"Just as with residential, many commercial property investors will be looking to refurbish a property before it can be leased. "
But it is not only residential investors that can benefit from the flexibility and speed of short-term funding – commercial property deals can benefit from bridging too.
For example, just as residential investors may need to turn a purchase around quickly – perhaps because they are buying at auction, or have been offered a limited-time price – so may investors buying a commercial property. And if this is the case, they will often need to complete much quicker than the time it takes to secure a commercial mortgage, which is where a bridging loan can help.
Bridging can also help investors looking to buy a commercial property that they are planning to develop, either as a completely commercial development or as mixed-use. For example, the declining UK high street can actually offer opportunities to develop much-needed houses with developers looking to convert empty commercial units into homes. Often, this means the purchase of a commercial property - perhaps shops with offices above - and turning those offices into flats. Bridging loans can offer a solution in this case, because if the commercial property is likely to get - or already has - planning consent to create flats, either for sale or buy-to-let, there is money to be made for the borrower and a clear exit strategy there for the lender.
Another use for bridging within the commercial market - again, as it is on the residential market - is refurbishment. At Hope Capital, an increasing number of our loans are now for refurbishment of properties. And just as with residential, many commercial property investors will be looking to refurbish a property before it can be leased. This could be just because they want to improve it to achieve a higher profit on resale, or because they have to – perhaps to achieve the EPC requirements before they are allowed to rent it out.
A bridging loan can turn the funds around quickly, providing the investor with the finance needed to fund the refurbishment, giving them time to secure a longer-term finance deal as the exit route.
Bridging loans can also be used to refinance and pay off debts, and this is often what borrowers come to us for. We often help commercial investors fund a development or purchase as well as refinance existing debts and settle CCJs.
Short term finance is not just for residential deals – it can offer the solution to many commercial property finance issues thanks to the speed at which a bridging loan can be turned around and the flexibility of finance that it offers.
