bridging loans
Property Bridging Loans.
Specialist Bridging Loan Broker Since 2004.
At Tiger Financial Ltd, we are one of the top brokers for property bridging loans in the UK. As such, we take great pride in the reputation we hold for the excellence of our services.
We are trusted by both property developers and bridging loan lenders alike, respected for our wealth of industry knowledge, valued for our expertise, and counted on to deliver the best property bridging loans with the most responsive service throughout the process for all of our clients. We leave no stone unturned in our mission to find the best deal for your property project. Our philosophy is that “your success is our success”, and this drives everything we do.
We have over 500 property bridging loan lenders on our database, spanning the whole spectrum of the market from high street banks to small niche bridging lenders and family office boutiques. In short, no other broker has more extensive or in-depth knowledge of the bridging loan market than we do. Contact us today if you would like to discuss how we could assist you in taking your property development business to the next level!
What Typical Criteria Apply for a Bridging Loan for Commercial Property and/ or Residential Property?
When applying for a bridging loan, it is critical to understand what each lender is looking for. This enables property developers, whether commercial or residential, to select the right lender for their own, unique circumstances. Typical lender criteria may include the following:
- Monthly interest rates on bridge loans from 0.80%.
- Loans of up to 90% of the purchase price (up to 75% LTV).
- Up to 75% LTV for property loans for residential borrowers.
- Up to 70% LTV for property loans for commercial borrowers.
- Up to 73% net loans for refurbishment of properties.
- Land with planning permission – up to 65% LTV.
- Short term bridging loans spanning one to 24 months, where the typical term is 12 months.
- Loans based on full open market value.
- No bar on individuals or companies with a poor credit history, including those with defaults/CCJs on their credit records.
- Discharged bankrupts welcome.
- Applicants with no proof of income welcome.
- First or second charge loans.
- No monthly bridge loan repayments.
- Bridging loans from £100k, with no upper limit.
- Bridging finance available in the UK and Western Europe.
- Overseas residents welcome.
- Bridging loans to individuals, Limited Companies, Limited Liability Partnerships and SIPP.
- AVM valuation option available.
- All types of property for security.
Bridging Loans Available for All Types of Property
If you are a property investor, there are many different scenarios in which a bridging loan could be invaluable, as well as a wide variety of types of bridging finance. Some of the reasons for applying for bridging finance might include wanting to purchase a property when it is un-mortgageable, or if you wish to carry out a refurbishment project. The rate of interest and loan to value on the bridging loan is dependent on the asset class, whether it is a first or second charge loan, the level of experience you have, and what you intend your exit strategy to be.
You can take advantage of bridging finance to fund the purchase and/ or refurbishment of nearly any type of property. This includes but is not limited to:
- Residential assets, including HMO’s and Buy to Let properties.
- Bridging loans for property development, whether for acquisition, and/ or to fund renovation or refurbishment work.
- Retail premises.
- Land which will usually come with some form of planning consent.
- Industrial property.
- Offices.
- Hotels and B&Bs.
- Houses of multiple occupation (HMO).
- Pubs.
- PBSA.
- Student accommodation.
- Restaurants.
- PRS sector.
- Farms.
- Permitted Development (PD).
- Mixed use properties.
- Care or nursing homes.
- Petrol Stations.
- Golf courses.
How Bridging Finance Works.
You will find that there are a considerable number of bridging loan providers in the market offering different bridging loans for property. Each of these has their own criteria and spheres of interest depending on the asset class involved, whether the project involves a new property or the renovation of an existing one, its location, the loan to value required, or whether the borrower profile fits the lender’s loan criteria. Some lenders refuse to offer bridging loans for properties outside of England, and others may only offer bridging loans that are unregulated. It is vital that you make an informed decision when selecting your loan and loan provider to ensure you secure the very best bridging deal for your business and your particular circumstances.
Our role as the best bridging loan broker in the UK is to inform you fully of your options and their implications, guiding you through the finance jungle to help ensure you secure the best possible bridging loan rates for your property project. Below, we list just a few of the most typical uses for all kinds of short-term bridging loans:
- Buying distressed properties from a Law of Property Act (LPA) Receiver.
- When you would like to secure or change an already granted planning permission.
- If there’s a need to complete the transaction quickly with no valuation.
- If you require a gross loan based on value rather than the purchase price.
- If refurbishment work is required on one of your properties.
- To purchase when there is a deferred consideration.
- The conversion of an at present uninhabitable property.
- If you wish to secure a change to the title of the property, either by splitting or joining.
- When you are unable to secure a mortgage or have no proof of income.
- If you require a working capital loan in order to grow your business.
- Where you want no monthly interest payments.
- If you need a bridging loan for auction property.
- To bridge the finance gap between the sale of your current home and the purchase of a new home; in order not to miss out on a good deal, for instance.
- If you are required to repay your current first charge mortgage balance.
Please note: the difference between an open bridging loan and a closed bridging loan is simply whether there is a guaranteed exit from the bridging loan; in other words, if there is a simultaneous exchange and completion of a sale on the day the bridge loan completes. The application process for an open and a closed bridging loan is the same regardless.
What Is the Difference Between Regulated and Unregulated Bridging Loans?
If mainstream mortgage funding is either unavailable or impractical for the purchase or renovation of a commercial property, then an unregulated bridging loan is often appropriate. You may, for instance, only require finance in the short term; or perhaps you need to carry out a degree of refurbishment work in order to increase the value of the property and then sell it on or refinance on a buy-to-let mortgage.
Regulated bridging loans for residential property are more typical if you or a close member of your family has lived or plans to live in the property. A regulated bridging loan is also often used to bridge any gap between buying a new home and selling your current home.
Regulated bridging loans are typically only granted for 12 months. You will normally be required to show evidence of a mortgage DIP/AIP to repay the bridging loan balance before you receive a formal offer of the loan. You should note that only brokers that are authorised and regulated with CeMap by the Financial Conduct Authority (FCA), can arrange a regulated bridging loan to buy property for residential purposes. Tiger Financial does not arrange these types of loans.
What Fees and Costs Are Charged When Taking Out a Bridge Loan?
One of the common myths surrounding bridging loans is that they are unnecessarily expensive. However, this is simply not accurate. Bridging loans are used when normal mortgage funding cannot be used, so a direct comparison is not appropriate.
Bridging can be used when a property is uninhabitable or if you need to carry out a heavy refurbishment or repositioning of the asset, i.e. by splitting the title or changing the class of use; none of which are possible with a mortgage but which carry a lot more risk, hence why the pricing is different.
Nonetheless, a good broker such as Tiger Financial will be completely upfront about the costs involved to ensure you are making an informed decision before committing yourself.
In the vast majority of cases, lenders do not charge any upfront fees. That is not to say, though, that you will not need to budget for any upfront costs. One of the terms and conditions may include a valuation by an RICS qualified surveyor. The fee for this can be anything from a few hundred pounds for a small residential property or new home, right up to several thousand pounds if the property being used for security constitutes a high-value commercial asset. Provided the valuation is all in order when complete, and the security property is an acceptable one that falls within the relevant lending criteria, the legal process can then commence.
You will be liable for the costs of both your own legal fees and those of your lender. Again, the sums involved can vary depending on the bridging loan work required and whether any investigation is needed into how the loan will be repaid. If the transaction and settlement of the loan are not to be by means of a straightforward sale, your lender will need to understand the nature and detail of your exit strategy. For this, you may be required to provide evidence, which can also result in an increase in costs.
As well as any valuation fees and the legal fees involved, you may also be required to foot the bill for any associated professional fees. These may arise if there are any structural issues, asbestos, Japanese Knotweed, damp, contamination, and/ or subsidence, for instance, that may require a specialist assessment. If you are taking out a bridging loan in order to renovate or develop a property, you may additionally be required to pay for an initial quantity surveyor report, as well as the ongoing monitoring surveyor costs.
The interest rate you are charged will vary depending on the asset class you are using as collateral, your strategy or exit route for repayment of the loan, the amount of equity you as the borrower are putting down, the perceived risks associated with the transaction, and your general creditworthiness and experience. Broadly speaking, the higher the LTV, the higher the percentage interest rate the bridge loan will attract.
In most cases, the lender will charge you an administration fee and arrangement fee/ facility fee, which will typically amount to 2% of the gross bridging loan borrowed. You will not normally have to pay any exit fees unless your case is particularly difficult or the assets are unusual. The monthly interest rate you will be expected to pay could vary depending on the strength of the underlying asset, your level of experience as a borrower, and for closed bridging loans, the strength of your exit strategy or the means by which you intend to repay the loan. Your credit profile will also play a part, with bridging finance at the highest loan to value and cheapest rates only available to borrowers who have impeccable credit records.
The arrangement fees are deducted from the gross loan, leaving the borrower with a net figure. If you are applying for a straightforward residential bridging finance transaction, you won’t always have to pay your broker’s fees, but where these are charged, i.e., with complex commercial cases, they typically amount to 1% of the gross loan.
What Checks Are Made by Bridging Loan Lenders?
If you have decided to apply for property development finance or a bridging loan for property in the UK, you should familiarise yourself with the common underwriting checks that lenders will tend to carry out before they approve the application for bridging finance.
The following factors will influence the lender’s decision to approve the bridging loan:
- The strength of the underlying property asset being used as security for the bridging loan.
- The borrower’s financial strength and stability.
- The borrower’s credit history. A poor credit profile is not necessarily a barrier to securing a bridging loan but may mean the facility fee, the interest rate set, the amount of the loan or the LTV might be affected.
- The borrower’s experience level and track record: have they have completed a scheme of a similar nature in the past?
- How the borrower intends to repay the bridging loan, known as their “exit strategy”, and how convincing that strategy is.
Why Not Try Our Bridging Loan Calculator?
Regulatory Information:
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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