Bridging loan – Short-term finance solutions, whatever the situation!
Bridging loans have many purposes, some of which are useful when a traditional mortgage lender won’t lend.
Light, medium or heavy refurbishment, when renovating a property and you need to make it fit for purpose or mortgageable with a traditional lender, or even to develop the property to increase its potential value of yield, think buy to let or a house of multiple occupancy.
Auction purchase, when a property is purchased at auction, and you need a quick solution so that you don’t miss the opportunity and will need to complete, normally within 28 days.
When the sale and subsequent purchase are not continuous and may fall through. Known as chain breaking, you may purchase the next property prior to the completion of the sale of the first property
We are experts in bridging finance. Whether it’s complex development transaction or a simple auction purchase, we have the answers you need. You don’t need to be the expert because we can be the expert for you.
The difference between a bridging loan and a mortgage is that the loan can be secured against a property that may not be suitable for a normal mortgage 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 can be much faster in certain instances. The bridge loan is often based on the Open Market Value of the property, rather than the purchase price.
This is especially useful when buying from a receiver/auction house.
As an example, you may have found your dream home, but need to sell your current one before purchasing it. There could be lots of interest in the home that you want to buy. A bridging loan could allow you to buy the new property, before selling your current one. You would market your current property as normal and once it sold repaid the bridging loan. (note this normally needs to be within 12 months)
As a further example, bridging loans could be used when you are:
This can provide the turn-around speed and flexibility to work within your requirements and timeframes.
The bridge loan term can be anywhere from 1 month up to (usually) a maximum of 12 months. There is not usually a maximum loan amount, as they are assessed based on the proposed usage, exit method and criteria on a case by case basis.
You can pay off a bridge loan at any time during the loan term.
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. Interest rates on bridging loans are monthly rates, not annual. A bridging loan charging 1% interest per month will cost 12% over a year.
Interest rates will differ depending on your personal circumstances and the property type, use, location etc.
The nature of a bridging loan means you need speed and efficiency in any application made.
Once you have submitted an enquiry, we will get an initial decision to you within 24 hours and contact you at your earliest convenience to progress your application.
A bridge loan can be arranged quickly which is why it is used when finance needs to be attained in a short time scale. The lender of the bridge loan will carry out their own checks to ensure the applicant meets the lending criteria.
Due to the nature of bridge loan lenders typically being smaller and more flexible, the time scales could be substantially shorter than a typical mortgage or loan product.
Bridging loans can be regulated or unregulated depending on the use of the property, unregulated bridging means it’s not governed by the Financial Conduct Authority (FCA). It’s always important that you are made aware of the full terms, all fees, charges and conditions of the loan, whether its regulated or not.
We have access to both regulated and unregulated bridging loans.
We have access to Bridging loans starting at £50,000 up to £10m.
Some of the standard fees you would expect to pay as a part of any bridge loan deal would be;
A Lender’s arrangement fee
A fee is commonly charged by a lender for providing the loan facility and is typically two percent (2%) of the loan amount. In some instances, it can be rolled within the loan depending on client or lender requirements.
An Exit fee
This fee may be charged by the lender when the loan is repaid. When charged, it is usually around one month’s worth of interest regardless of whether the loan has run to its full term or was completed early.
A Surveyor’s fee
A fee will usually be payable to the firm hired to survey the property which is usually required as a part of the finance proposition process.
As with a standard mortgage, bridge finance must be processed with all the usual legal requirements stipulated by regulations. In some cases, lenders have in-house legal professionals which may apply these costs into the lender’s arrangement fees.
A Broker Fee
Clever Lending charge a broker fee for their expertise in finding and arranging your required finance, looking across a panel of lenders with multiple products and options.
Clever Lending helped a customer to achieve the following:
Complete our quick form
Complete our quick enquiry form and we will call you back to discuss further
Competitive rates on bridging loans with 100% LTV available with added security
Hundreds of products
First, second and third charge bridging loans available from £50,000 with terms from 1 month to 24 months
Not every case is the same
As each customer’s situation is unique, we’ll take the time to understand your situation, and we carefully assess your property finance requirements.
No exit or legal fees
We can offer bridging loans with no exit fees for flexibility of the investment plan
Staged release on development
Borrowers can secure renovation funds for various stages of their property renovations