What is a bridging loan? How is it different to Mezzanine Financing?
Bridging Loans are one of many financing options available to real estate developers and sits under the umbrella of short-term loans or short term finance. Bridging Finance is typically used for site acquisition or in some instances to fund a holding period before a development starts such as obtaining planning or enhancing planning.
Bridging loans aren’t typically in place for the property development phase, they are usually refinanced onto a development loan before construction starts.
Mezzanine finance is a type of finance where the mezzanine lender takes a second charge on the asset. The mezzanine loan could be a second charge bridge or a second charge loan on a development.
Iron Bridge Finance can offer both types of mezzanine loans, with a focus on mezzanine loans on developments. We do also offer 1st and 2nd charge bridging loans to be able to support developers across the entire project life cycle from site acquisition through construction and sales.
Bridging loans and Mezzanine Loans are forms of debt in the capital stack of a property development deal (which we have covered in detail in our other blog posts). Both debt and equity can be blended in different ratios depending on the developer’s risk appetite and their ability to raise finance.
Our team at Iron Bridge Finance has a wealth of experience in supporting developers and brokers to provide optimal funding structures, please call us on 0207 722 9092 or email us at [email protected] to discuss your or your client’s next development.