Bridging
Loan Faqs.

As a short-term loan, they are generally taken out for between 3-12 months, but can be for up to two years.

It depends. You have the option to either service the loan, or to have the interest “rolled up” and deducted from the gross loan, meaning there will be no monthly payments throughout the course of the bridge loan.

As bridging loans are for the short-term, each client must have a plan in place to pay off the loan at the end of the term. This is known as an “EXIT route” – often a buy to let mortgage to refinance the investment property.

Yes. We are directly authorized and regulated by the Financial Conduct Authority.

Typical charges on bridging loans are an arrangement fee, valuation fee, and legal fees. The valuation fee will be dependent on the type and sized of the asset being valued. The interest rate paid per month will be determined by the strength of the underlying asset and whether the borrower/buyer has bad credit or not. Some bridging lenders charge an administration fee, and for unusual deals, they may charge an exit fee when the loan is repaid.

An unregulated bridging loan is where the borrower or a family member has not and will not reside in the subject property. We can still assist if you require a regulated first charge or second charge bridging loan.

A bridging loan facility is a type of finance that is typically taken out for up to 12 months and used when a regular mortgage would either be outside lending criteria for the mortgage lender or not the best option. The bridging lenders arrangement fees and rates tend to be slightly higher than a mortgage, as do the valuation fees and legal fees, due to the typically higher complexity of bridging finance facilities.

Individuals, UK Ltd companies, LLP’s, Trusts, and overseas companies can apply for bridging finance. Other ownership structures may be considered.

Some do and some don’t. Usually, for the cheapest interest rate, this would involve a bridging loan lender that does check your credit rating. However, there are many non-status lenders who offer bridging finance at competitive interest rates that do not do a check. Although, if relying on buy to let mortgages to repay the loan, you should check with the lender first.

Yes. Bridging loans, development finance, and mezzanine funding are available throughout the UK and certain countries in Western Europe.

Yes. There are a handful of bridge finance lenders who cater to overseas residents using bridging to buy properties in the UK. These specialist facilities depend on the buyer profile.

It depends. If you take out the bridging loan in order to refurbish the property and then sell it, then no, they will not require it. However, if you are buying a property with the intent to refinance it and hold as an investment, then the bridging finance lender may require sight of a suitable mortgage offer.

Bridging loans up to 100% of the total refurbishment cost are available, as long as you remain within 65% of the GDV. Interest rates can vary on the extent of the work being done.

Yes, some bridge loan lenders will lend against purely the OMV rather than the purchase price. This is especially useful when buying distressed assets from a receiver or at auction. The loan to value is sometimes limited to 90% of the purchase price.

Yes. This is one of the most common uses for bridging loans. Not only is the bridging loan available much quicker than regular mortgages, even in as little as 3 days. The interest rate for these urgent bridging loans is usually higher, to account for the extra speed.

Yes. Bridging finance is available regardless of the income of the applicant. Monthly interest and the arrangement fee will be rolled up for the duration of the bridging loan. The cost will vary, depending on the borrowers experience.

Yes. As long as the land has some form a planning consent, then finance is available to assist with land acquisition.

No. Unlike mortgages, bridging loans do not usually have redemption penalties. Typically they will have a 3 month minimum term and some more niche assets may have a fixed “exit fees” which will need to be paid, no matter when the loan is redeemed.

No. You can still get a loan if you have CCJ’s and other adverse credit. However, if the county court judgement is not satisfied, the lender may ask you to settle it before you get your loan.

Yes. You can borrow in a wide variety of corporate structures, including Ltd Co/LLP/Offshore Co’s and SIPP’s. Interest rates will also be the same as for a personal application.

Yes, as long as you are outside the minimum finance term (usually 3 months, but can be 1 month). If you paid back the loan early, you will have any retained interest returned to you.

The vacant possession value or “VP” value, is the value of the underlying property asset, excluding any goodwill, hope value or income multiple.

This is a major factor when using bridging loans to acquire income producing assets, like a care home or a restaurant. The loan will only be based on the value of the property as if it were a vacant, non operational asset, which can severely restrict the amount of lending available.

Normally you would need at least 30% for residential properties. However, bridging loans are often used to buy distressed properties under value from auction houses or receivers. This is a good way to reduce the deposit that you will need, with 100% loans available in some cases.

Yes, very. In fact, before you apply for any bridging facilities, you should think very carefully about how you will repay the loan. Some lenders will require evidence of the exit as part of their underwriting process.

It depends on the lender and the ltv. Some lenders will require the borrower to have carried out 3 or more similar property projects in the past. However, some lenders, especially at lower ltv are happy to work with first time investors, although they may charge a slightly higher interest rate to allow for the increased risk profile.