How Commercial Bridging Loans Fuel Property Development Projects

In the fast-paced world of property development, securing finance quickly and efficiently is essential to keeping projects moving. 

Whether you’re transforming an auction property, or purchasing land for future construction, there are many stages in a property development journey where quick access to capital can make all the difference. 

This is where commercial bridging loans come in, offering a flexible and fast solution to fund short-term needs.

At MS Lending Group, we understand the intricacies of property development and offer a range of tailored bridging finance solutions that can support developers through each stage of the process. That being said, we have created a guide for all you need to know on the topic right here.

How Does Property Development Finance Work?

Property development finance is a broad term that refers to the various types of funding available to property developers. No matter the size or scale, every project requires capital at multiple stages. 

Traditional forms of lending, such as mortgages, can often be slow to process and may not be suitable for short-term needs, so what is the other option?

A commercial bridging loan, however, is designed to bridge the gap between a financial requirement and a longer-term funding solution. Property development bridging loans are typically used when immediate cash flow is needed to secure a property, pay for construction work, or refinance an existing loan. 

They are short-term in nature and usually repaid when a more permanent finance arrangement is secured and have unique exit strategies when compared to traditional mortgages.

Types of Property Finance Bridging Loans

There are several types of commercial bridging loans for property development tailored to different aspects and stages of the process. Some common products include:

• Development Finance Bridging Loans: These are used to fund the construction or refurbishment of a property, providing the necessary capital to keep building work progressing smoothly.

• Auction Finance: Many developers purchase properties through auctions, where they must complete the sale within a set time frame. Bridging loans can provide the quick funding necessary to meet these deadlines.

• Land Bridging Finance: This provides immediate capital to cover the gap between purchasing land and securing long-term financing, or completing the sale of an existing property.  

Each type of loan serves a specific purpose, making it important for developers to understand which option best suits their project’s needs.

We at MS Lending Group offer expert guidance to help determine which bridging loan works best for you, so don’t forget, for guidance, you can talk to our team.

How to Apply for Property Development Finance

Applying for property development finance, particularly bridging loans, is relatively straightforward should you choose reputable commercial bridging finance lenders. 

While we can’t speak for every lender, there is a general consensus around the process and a structure that is typically followed.

This includes the following steps:

Step 1: The Initial Consultation: A conversation with a lending specialist to discuss the details of your project and assess your financial requirements.

Step 2: Valuation and Due Diligence: Once your project is understood, the lender will determine the amount that can be borrowed based on a range of eligibility and exit strategy worthiness.

Step 3: Offer and Terms: After due diligence, a formal offer is made, outlining the loan amount, interest rate, and repayment terms.

Step 4: Loan Approval: Upon acceptance of the terms, the loan is finalised, and funds are typically available within days, making bridging loans a rapid solution for pressing finance needs.

How to Decide the Level of Finance You Need

Determining how much finance you need is a crucial part of the process. A number of factors will influence this, including the purchase price of the property, refurbishment or construction costs, legal fees, and any unforeseen expenses that may arise.

It’s important to strike a balance between securing enough funding to cover all aspects of the project, while avoiding over-borrowing. 

An experienced lender can help developers assess their financial needs accurately, ensuring you have enough capital to see the project through to completion without overextending your borrowing.

Why Are Commercial Bridging Loans Useful for Property Developers?

The key advantage of commercial bridging loans lies in their flexibility and speed.

Property development is often time-sensitive, and delays in securing funding can lead to missed opportunities.

Ultimately, it isn’t uncommon to have gaps in cash flow, but this doesn’t make it any less convenient as this break in the chain can make or break the efficacy of a sale.

The good news is, these loans can be used to bridge gaps in cash flow while waiting for longer-term finance, such as a mortgage or the sale of another property, to come through. 

This can be particularly beneficial for property developers who need to juggle multiple projects or stages of development simultaneously.

Commercial bridging finance deals provide access to funds quickly, allowing developers to take advantage of opportunities as they arise, whether it’s a time-sensitive auction purchase or an urgent refurbishment project.

How to Find a Property Development Loan Provider

Choosing the right loan provider is as important as selecting the right type of finance. Look for lenders who have experience in the property development sector and can offer flexible terms suited to your project’s scale and needs.

Talk to them about exit strategies and collateral, as this is likely to be different to your average mortgage lender.

At MS Lending Group, we specialise in offering tailored bridging loans for property developers, with a deep understanding of the UK market. 

Our team of experts can help assess your project’s requirements and offer solutions that keep your development on track.

With a reputation for fast decision-making and competitive rates, MS Lending Group is a trusted partner for developers looking to secure flexible finance solutions.

Commercial bridging loans are an invaluable tool for property developers who need swift and flexible access to finance.

Whether you’re purchasing at auction, funding construction work, or refinancing an existing loan, bridging finance can ensure your project stays on schedule. By partnering with an experienced lender like MS Lending Group, you can navigate the journey of property development finance with confidence, securing the funds you need when you need them most.