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Bridging Loans Help Centre

From “What is a bridging loan?” to “What checks will lenders make?” here’s the Tiger Financial Guide to bridging loans and the application process!

If you have other questions about bridging loans and property development finance, our dedicated team of experts are on-hand to provide you with all the information you need to make an informed decision.

Tiger Financial are specialist property finance brokers working with a carefully selected group of bridging loan lenders from across the marketplace. We’re one of the UK’s leading brokers, with over 10 year’s experience in the industry. We are dedicated to ensuring every one of our clients finds the right product and the best rate for their loan.

Everything you need to know about our bridging loans

What is a bridging loan?

A bridging loan is a short-term interest-only loan available to those that ARE:

  • Buying under value from an LPA Receiver
  • Purchasing before planning permission
  • Buying at auction
  • Borrowing against value not purchase price
  • Development and refurbishment
  • Buying with a deferred consideration
  • Developing an uninhabitable property
  • You wish to split the title
  • When conventional credit is refused
  • You need working capital
  • You want no monthly payments
  • When you need finance fast

Bridging loans are secured against property or land via a first, second or equitable charge.

How long can a bridging loan be taken out for?

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

What is an exit route?

As bridging loans are for the short-term, each client must have a plan in place to pay off the loan. This is known as an ‘exit route’.

What are first and second charge loans?

A ‘first charge’ is the primary mortgage or loan secured against a property. This takes precedence over all other finance secured against it. However, If there is sufficient equity in the property, a ‘second charge loan could be secured against it.

Are loans available throughout the UK?

Yes. Bridging loans and development finance are available throughout the UK, including Northern Ireland.

What is the maximum loan to value (LTV)?

The normal loan to value (LTV) is 70% of the open market value, however there are some select lenders that will offer 75% or even 80% for residential property. Land and commercial property tend to be between 65%-70% LTV.

Who can apply?

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

Will the lender credit check me?

Some do and some don’t. Usually for the cheapest rates, this would involve a lender that does do a credit check. However, there are many non status lenders who offer competitive rates that do not do a check.

What if i have a poor credit history or CCJS?

No problem. The funding is decided based upon the strength of the property asset being used as security, regardless of the profile of the borrower.

Can you arrange regulated loans?

No. We are not regulated by the Financial Conduct Authority. However we are happy to recommend someone who is.

What is an unregulated bridging loan?

An unregulated bridging loan is where the borrower or a family member will NOT reside in the subject property.

Are there monthly payments?

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 loan.

What other costs are involved?

For all loans, the borrower will usually have to pay for a valuation of the property, and the lenders legal costs.

Most lenders charge an arrangement fee of 2%, some lenders charge an administration fee, and for unusual deals, they may charge an exit fee when the loan is repaid.

How much can I borrow?

Generally the minimum loan size is over £100,000. The maximum loan size is dependent on the strength of the asset being used as security. There is no realistic upper limit for the right project.

How long does it take?

Depending on the speed of the valuation, and the preparedness of the legal teams on all sides; an offer can be provided with 24 hours and the funds available within 48 hours. The normal timeframe for a bridging loan application is 2-3 weeks, and for a development finance application 4-6 weeks.

When to use a bridging loan

Bridging loans are mainly used by clients that need quick, short-term capital to fund a property purchase. They include those who:

  • Need to complete quickly. This might include property developers, who often have the opportunity to secure a great deal if they can complete quickly.
  • Buy through a property auction. Bridging loans are popular with those buying property at an auction. Here, completion has to take place within 28 days which means traditional financing is not usually an option.
  • Are in a broken property chain. A bridging loan enables a seller of one property to secure their new property before the sale of their existing property goes through.
  • Want to buy an uninhabitable property. Traditional lenders will often not lend on a property if there is no kitchen, bathroom, central heating or running water (especially buy-to-let mortgages). A bridging lender will base its lending on the property’s value in its current condition, however. This means the buyer can get access to the property and work on it to make it habitable.
  • Are renovating or developing a current property. A property investor may want to renovate a property within a few months and either sell it on or refinance. A bridging loan can often be the perfect vehicle for this short-term capital requirement.
  • Have to get planning permission. In order to obtain planning permission and secure development funding, the developer may need immediate access to capital.
  • Need a lease extension. When a property has a short lease a borrower will likely be refused a traditional mortgage. A bridging loan can be used to extend the lease, which then makes the property mortgageable through conventional lenders.

What properties can you arrange funding for?

  • Residential property
  • Commercial and semi-commercial property
  • Land
  • Hotels and Pubs
  • Development finance
  • Investment Portfolios
  • Industrial Units
  • Factories
  • Nursing/care homes
  • Multiple occupation (such as HMOs)
  • Farms or agricultural property
  • Offshore special purpose vehicles (SPV)

I am self-employed with no accounts. Can I still get a loan?

Yes. Funding is available regardless of the income of the applicant. Interest and fees will be rolled up for the duration of the loan.

Our loans are non status and based solely on the market value, regardless of purchase price.

The bridging loan application process

1. Getting Started

Once we have spoken to the lender and received the high level indicative terms by email, if you wish to proceed, please simply confirm by email or by giving us a call so that we can proceed to the next step.

3. The Valuation

As soon as the funds arrive with the lender, they will liaise with the appointed RICS valuer, and you, to arrange the fastest and most convenient appointment for the valuation. Some well known valuers are noted below.

5. The Funds are released

As soon as the legal paperwork is completed, the funds will be available for drawdown.

2. The agreement in princible

Once you give us the green light, we will send you the required application forms for you to complete, and request a copy of your passport and proof of address. We may also ask for your credit report if you have any credit issues that we should know about. Once these documents are received, we will send them to the lender so they can issue an Agreement in Principle or “AIP. This document sets out the basic terms of the loan. If you agree, the lender will then request the fees to instruct the valuation.

4. The solicitors

Once the valuation report comes back after a few days, the solicitors will be instructed to complete the legal process. The borrower is obliged to pay for these costs, so your solicitor will need to send an undertaking to the lenders solicitors that you will pay for these fees.

6. That's it

It really is that simple to get a bridging loan. The process usually takes 2-3 weeks, but can be done quicker if required.