Bridging Finance vs Private Lending: What’s the Difference?

When it comes to short-term property finance, many borrowers get confused between bridging finance and private lending. Both options provide fast access to funds, but they serve different purposes and suit different scenarios. Understanding the difference is essential to make the right financial decision.

At Brampton Finance, we help property investors, developers, and business owners navigate these options to ensure you access the right funding at the right time.

What is Bridging Finance?

Bridging finance is a short-term loan designed to “bridge” the gap between buying a new property and selling an existing one.

Key features include:

• Typically used when purchasing a property before your current one sells

• Secured against your existing property, the new property, or both

• Short-term, usually 3–12 months

• Interest rates are generally slightly higher than standard home loans

• Fast access to funds for deposits, settlement, or renovations

  
  

Ideal for:

• Homeowners upgrading to a new property

• Investors who want to act quickly on a purchase without waiting for their current property to sell

What is Private Lending?

Private lending involves borrowing funds from non-bank lenders, such as specialist finance companies or private investors.

Key features include:

• Can be structured as a short or medium-term loan

• Flexible approval criteria — often more accommodating than banks

• Secured against property or other assets

• Interest rates are higher than traditional bank loans, reflecting the higher risk and faster approval process

• Suitable for non-standard borrowers, such as those with complex income structures or development projects

Ideal for:

• Property investors needing fast settlement

• Borrowers who don’t fit standard bank lending criteria

• Developers seeking interim funding for projects

Key Differences Between Bridging Finance and Private Lending

While both options provide short-term finance, the differences include:

Purpose: Bridging finance is designed specifically to cover the gap between selling one property and buying another. Private lending is more flexible and can be used for a variety of short or medium-term purposes, including developments, renovations, or other investments.

Lender Type: Bridging finance is usually provided by banks or traditional lenders, whereas private lending comes from specialist lenders, finance companies, or private investors.

Approval Criteria: Bridging loans are stricter and depend on existing mortgage and equity positions. Private lenders are often more flexible, accommodating complex or non-standard circumstances.

Interest Rates: Bridging finance generally has lower interest rates compared to private lending, which reflects the higher risk and speed of private finance.

Loan Term: Bridging loans are usually 3–12 months, while private loans can range from 1–24 months or longer, depending on the arrangement.

How to Decide Which Option is Right for You

Choosing the right solution depends on your financial position, timing, and purpose:

• If you are selling a property to buy another: Bridging finance is usually the most cost-effective and structured option.

• If you have complex circumstances or need rapid approval: Private lending can offer speed and flexibility where banks may decline.

• If you are funding a development or renovation: Private lending often allows tailored loan structures that traditional bridging loans cannot accommodate.

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Why Use a Broker Like Brampton Finance

Navigating bridging finance and private lending can be complex. At Brampton Finance, we:

• Assess your circumstances to find the most suitable lending solution

• Provide access to a wide range of lenders, including banks and specialist financiers

• Help structure loans efficiently to minimise costs and settlement delays

• Simplify paperwork and guide you through approvals

Final Thoughts

Both bridging finance and private lending can provide fast, flexible funding, but they are not interchangeable. Understanding your needs and working with an experienced broker ensures you secure the right loan for your situation.

Contact Brampton Finance today for a free consultation and find out how we can help you access fast, reliable finance for your next property or project.