Bridging & End-Financing

We often hear such terms “Bridging Finance” and “End-Financing” in the housing/property development industry.

This article seeks to give some simple clarifications of such terms used.

Bridging Finance is:

• A temporary advance to bridge the financial gap from commencement of a project until the eventual return of the cash when the project is completed;

• As it is on a temporary basis, it’s therefore a short term financing tool;

• Terms and conditions of the advance will be determined by merits of each project and

• Is popularly used by housing developers for developmental costs before sale proceeds of their houses are realized.

End-Financing is:

• A facility solely for the benefit of the housing/property developers;
• With this facility, the eventual recipient of the loans which are the individual property purchasers can then book the property;
• Very useful for the housing/property developer as the availability of end-financing encourage decisive and speedy booking by the public;
• The end-financiers which are the financial institutions ensure prompt progress payment on behalf of their clients/purchasers thus ensuring a smooth cash-flow to the housing developer;
• Quantum of end financing required depend on project’s viability, number of property units intended to be developed, the developmental costs and the total sale price of the properties.