BRIDGING LOANS SINCE 2004
SPECIALIST BRIDGING LOAN
BROKER SINCE 2004.
As one of the top bridging loan brokers in the UK, we take pride in our reputation for excellence. We are trusted by property developers and bridging loan lenders alike, respected for our industry knowledge, valued for our expertise, and counted on to deliver the best bridging loans and most responsive service for our clients. We leave no stone unturned in our mission to find the best deal for your property project, and our philosophy – “your success is our success” – drives everything we do.
With over 400 bridging loan lenders on our database, from high street banks to small niche bridging lenders and family office boutiques, no-one knows the bridging loan market better than us. Get in touch now to see how we can help take your property development business to the next level!
WHAT IS THE DIFFERENCE BETWEEN A BRIDGING LOAN AND A MORTGAGE
The difference between bridging finance and a mortgage is that the loan can be secured against a property that may not be suitable for a normal term loan i.e an uninhabitable property that is to be refurbished, a property whose title will be changed, or if the class of use of the property is to be changed throughout the course of the loan. In fact there are many different uses for a bridging loan.
Funds are available much more quickly than a mortgage; typically 3-4 weeks, and the bridge loan is often based on the OMV of the property, rather than the purchase price, which is useful when buying BMV or from a receiver/auction house.
Also, the interest payments for the bridging loan facility can be rolled up throughout the term, which means there would be no monthly interest payments to worry about.
Typical Criteria for Bridging Loans:
- Monthly bridge loan interest rates from 0.44%
- Loans up to 100% of the purchase price (up to 75% LTV)
- Up to 75% LTV for residential property loans
- Up to 70% LTV for commercial property loans
- Up to 68% net loan for refurbishment
- Land with planning up to 70% LTV
- Short term bridging loans from 1-24 months
(Typical term is 12 months)
- Loans based on full open market value
- Poor credit history welcome, including with defaults/CCJs
- First charge loan or second charge loan
- No monthly bridge loan repayments
- No proof of income
- Bridging loans from £100k - no upper loan size.
- Discharged bankrupts welcome
- Bridging loans available in UK and Western Europe
- Bridging loans to individuals, Ltd Co’s, LLP’s, SIPP
- Overseas residents welcome
- No valuation option available
- All types of security property
BRIDGING LOANS AVAILABLE FOR ALL TYPES OF PROPERTY
As a property investor, there are many different types of bridging and differing reasons for using a bridging loan, such as when you wish to buy a property when it is un-mortgageable, or if you wish to carry out a refurbishment. Bridging loan rates of interest and the loan to value will depend on the asset class, whether it is a first charge loan or a second charge loan, what experience you have, and what your exit strategy will be.
Bridging finance is available for nearly all types of property, including:
- Residential assets, including HMO’s and Buy to Let.
- Refurbishment loans, both for acquisition and to fund renovation work
- Retail premises
- Land – usually with some form of planning consent.
- Hotels & B&B’s
- Houses of multiple occupation (HMO)
HOW DOES BRIDGING FINANCE WORK?
As a specialist bridging loan broker, our job is to guide you through the finance jungle to help you secure the best possible bridging loan rates for your property project. Below are some of the common uses for all types of short term bridging loans:
- Buying distressed properties from an LPA Receiver
- When you want to attain or change planning
- If you need to complete urgently with no valuation
- If you want the gross loan based on value, not the purchase price
- If you need to do some refurbishment work
- Buying when there is a deferred consideration
- Converting an uninhabitable property
- If you wish to change the title, either by splitting or joining
- When you can’t get a mortgage or have no income proof
- You need a working capital loan to grow your business
- You want no monthly interest payments
- When buying the security property at auction
- If you want to bridge the gap between the sale of your home and the purchase of a new home
- When you need to repay your current first charge mortgage balance
Please note: although the application process is the same, the difference between open bridging loans and closed bridging loans is simply whether there is a guaranteed exit from the bridging loan i.e a simultaneous exchange and completion of a sale on the day the bridge loan completes.
WHAT IS THE DIFFERENCE BETWEEN REGULATED AND UNREGULATED BRIDGING LOANS?
Unregulated bridging loans for business purposes are often used when mainstream mortgage funding may not be available or practical for the project i.e when you only need short term finance or you need to do some refurbishment work to increase the value of the property, to then sell or refinance on a buy to let mortgage.
Bridging loans are classed as regulated if you or a close family member have lived, or plan to live in the property. This also includes if you use a bridging loan to bridge the gap when buying a new home while waiting on your current home to sell. These bridging loans are only available for a loan term of 12 months. Evidence of a mortgage DIP/AIP to repay the bridging loan balance would normally be required before receiving a formal loan offer. Note, only brokers authorised and regulated by the Financial Conduct Authority (FCA), such as Tiger Financial, can arrange these bridging loans.
WHAT ARE THE FEES AND COSTS WHEN TAKING OUT A BRIDGE LOAN?
In most cases, the lender will not charge an upfront fee. However, you will still have to budget for some upfront costs, such as a valuation fee for a RICS qualified surveyor, which can be a few hundred pounds for a small residential property or new home, up to several thousand pounds when the property being used for security is a high value commercial asset. Assuming the valuation comes back as okay, and the security property is acceptable and within lending criteria, then the legal process will start.
You will be liable for the cost of the lender’s legal fees, as well as your own, which again can vary with the bridging loan work required and whether they need to investigate how you will repay the loan. If not via a straightforward sale, they will need to understand your exit strategy and for which you may have to provide evidence, which can also increase the cost.
In addition to the valuation fees and legal fees, you may also have to pay for any associated professional fees, such as if there are any structural issues, damp, contamination, asbestos, Japanese Knotweed, subsidence etc that may require a specialist assessment. Also, bridging loans that are being used to renovate or develop a property, may require an initial quantity surveyor report, as well as the ongoing monitoring surveyor costs.
In most cases, you will be charged an administration fee and arrangement fee/facility fee by the lender, typically 2% of the gross bridging loan amount. Exit fees are not usually charged, but on difficult cases or unusual assets, the lender may charge an exit fee. Monthly interest rates vary with the strength of the underlying asset, the experience of the borrower, and for closed bridging loans, the strength of the exit strategy – or how you intend to repay the loan. The client’s credit profile is also a factor, with bridging finance at the highest loan to value and cheapest rates only available to those borrowers with clean credit.
The arrangement fees are deducted from the gross loan, leaving the borrower with a net figure. Broker fees are not always charged for straightforward residential bridging finance transactions, but when charged, are typically 1%.
The interest charges vary depending on the asset class being used as collateral, the repayment strategy or “exit route”, the amount of equity being put down by the borrower, the perceived risks and the general creditworthiness and experience of the applicant. In general, the higher the LTV, the higher the bridge loan percentage rate.
WE ARRANGE SHORT TERM PROPERTY BRIDGING LOANS AND DEVELOPMENT FINANCE
In order to successfully apply for a bridging loan or property development finance, it’s important to be aware of the common underwriting checks that lenders will carry out before approving the bridging finance application.
Bridging loan approval depends on a number of factors including the following:
- The strength of the underlying property asset being used as security for the bridging loan
- The financial strength and stability of the borrower
- Credit history. A poor credit profile will mean the facility fee, interest rate, loan amount or LTV might be affected
- The experience of the borrower and whether they have completed a scheme of a similar nature in the past
- The strength of the “exit strategy” – or how you intend to repay the bridging loan
THE BRIDGING LOAN CALCULATOR
There are many types of bridging and security properties, all of which will have an effect on the bridge loan interest rate, including whether the loan is a first charge or a second charge.
Once you find the right bridging loan product, you can input the interest rate, bridge loan amount, and loan term into our bridging loan calculator to calculate your monthly interest payment and the total interest that will be paid. You can also add the arrangement fee, broker fee, and admin fee amounts, to see your estimated day one net loan.
Unlike other forms of property finance, with bridging finance, there are typically no early repayment charges after the first 3 months.
Tiger Financial Ltd is a financial services company registered in England no: 10225910. Tiger Financial Ltd is directly authorised and regulated by the Financial Conduct Authority (FCA) no 915106. The FCA does not regulate all mortgage or bridging loan products. Think carefully before securing debts against your home. Your home could be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.
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