Mortgage, bridging loan or development finance?

24 Sep 2019 by Top Tier Bridging Loans

Mortgage, bridging loan

When a business needs an injection of money, directors have the choice of whether to opt for mortgage, bridging loan or development finance. Here, we take a closer look at the different types of loan available.

Commercial mortgage

Businesses needing loans over £25k can apply for a commercial mortgage which can be paid back over a period of between three and 25 years. It is a secured loan against your property, and your projected business income will also be taken into consideration by the mortgage provider.

While a commercial mortgage is cost-effective as a long-term option, it will require many checks and could take weeks or even months to arrange.

Bridging loan

A bridging loan gives you short-term funding for a period of between three and 24 months. The loan amount is based on the value of the property it is secured against, and it can be anything up to 80% of that value.

Bridging loans can be arranged very quickly once the property has been valued. They offer huge flexibility to companies and are ideal for those wanting to take advantage of immediate opportunities, to keep trading in the event of a temporary cash-flow problem, or to tide things over while waiting for a commercial mortgage to be approved.

Development finance

Development finance is usually a loan that is issued in stages. It’s most frequently used for property development, when a steady stream of finance is needed for materials and labour, and how much you would be eligible to borrow is based on the gross development value. The loan is repaid when the development has been completed and the property sold. Development finance is especially useful for developers taking on properties that need a lot of work before they can be sold or let out.

With Top Tier, development finance and bridging loans can be arranged for between £100k and £5m, for up to 80% of your property’s worth. Loans could be issued within days of application, enabling you to take advantage of new business opportunities at short notice. Get in touch!

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