If you need a short-term loan which is secured against an asset, bridging loans can be viable solution for resolving your financial needs. Historically, bridge loans have been used to bridge-the-gap between two long-term mortgages, but they are now used for a myriad of different purposes. Bridge financing is primarily used to service those when banks cannot. For instance, when swift access to funds is necessary for an auction purchase, or for resolving immediate debt.

There are several reasons why someone may not qualify for a regular loan, and instead may require bridge financing. One may be that the individual has a poor credit history, as most lenders rely on credit scores to assess the risk of lending. Another could be a high debt-to-income ratio as, even with a large income, having high levels of existing debt may make it difficult for banks to arrange additional debt. More commonly, some borrowers may not have an adequate down payment for the loan, which makes the likelihood of their loan application being accepted far lower.

Bridge loans have a maximum term of two years but are usually financed with a term of one year. Typically, the loan-to-value (LTV) ratio is 70%, meaning that up to 70% of the property’s value can be borrowed. For example, if the value of a property is £10,000,000, a bridging loan can be arranged for £7,000,000. VAR Capital can facilitate bridge loans in less than ten days, ensuring that you acquire financing when you need it.