Bridging Finance for Commercial Unit Development

GROUP MD

Hugh Wade-Jones

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Key Figures: 

• Client: British National & Monaco Resident
• Property type: Commercial Unit 
• Property Value: £1,500,000 
• Loan Amount: £1,125,000 
• LTV: 75% 
• Variable Rate: 0.7% per month

Bridging finance is commonly used when you need capital in order to build or redevelop a property. In this case, we were approached by a British national and Monaco resident looking to develop a vacant commercial unit located in London. Time was of the essence, which meant bridging finance was the client's preferred financial vehicle. 

The underwriting process of bridging loans also moves fast. Lenders require focused information that pertains to the different aspects of the transaction rather than lots of superficial details. Very broadly, lenders will be looking at:

• The real estate at the centre of the transaction
• Risk
• How you will exit the loan

The stronger your initial position, the faster you will be able to access bridging finance and the more you will be able to borrow. Lenders will be looking at the quality of your assets (those you are using as security and what you want to finance) as well as select elements of your background. The better your track record and more solid your finances, the easier it will be to access very competitive short-term bridging finance.

Your profile and track record will also influence what a lender will offer you. More liquid developers who can showcase a track record of successful projects and who are developing in-demand property in sought-after areas will get better rates than a first-time lender with a development project that carries more risk. However much you want to borrow, your lender will always balance the deal so that you have to invest enough personal capital that will make it impossible not to give the project your all.

Wasting time to find competitive offers or explaining your situation to lenders that don’t want to lend in your scenario can cost you a deal. Working with astute and capable partners like Enness, who have access to all lenders and understand their preferences and individual requirements, is especially recommended for short-term transactions.