Bridging Finance

What is Bridging Finance?

Bridging finance is an interest only, short term loan, secured on land or property, both residential and commercial. A first or second charge will be taken against new or existing property, or a combination of both. Bridging Finance allows you to act quickly and then re-finance to a longer term solution. Speed of completion is usually critical as bridging facilities are often required to resolve a temporary cash flow problem or to meet tight deadlines.

Why would you need Bridging Finance?

There are many reasons why you would need to utilise bridging finance but the main one being, you don’t have much time and you need money.

· ♦ Purchasing a new property before selling your existing property

· ♦ You have negotiated a substantial discount for a quick completion

· ♦ Last minute hitches; your offer of mortgage is revoked or the buyer of your property drops out and you risk losing your deposit.

· ♦ Purchasing a property, refurbishing and adding value before selling

· ♦ Purchasing a property, refurbishing and adding value before re-mortgaging to a standard lender using the new increased valuation

· ♦ Buying a property at Auction. You generally only have 28 days to complete and most mortgage companies can’t guarantee to complete in that time.

· ♦ Releasing equity from your own residential or commercial property for whatever reason including; Tax or VAT bills, personal or business short term cash flow, divorce settlement, purchase of a business or purchase of an overseas property.

· ♦ Funds can be raised for any legal purpose

What type of property can be used as security?

Lenders will accept residential freehold and leasehold property, commercial property and land.

How much can you borrow?

The amount you can borrow is based on the value of the property being offered as security. This can be property that you already own or the property you are purchasing. On average lenders will lend up to 85% loan to value for Residential property and 80% loan to value for Commercial property. Most lenders will lend on the true value of the property and not the purchase price. You can borrow 100% of the purchase price of a property, if additional property is available e for security. Lenders will lend amounts from £25,001 to £10 million plus.

What is a second charge?

If you have a property with an existing mortgage, that mortgage lender will have the first charge over the property. If there is enough equity available within the property another lender can lend you additional funds and place a second charge on the property.

How long can you borrow the money for?

The term of the loan can run from 1 day to 12 months

How quickly can you receive the funds?

The main attraction of a bridging loan is that when you are in a hurry, funds can be made available to you in as little as 48 hours, but in the majority of cases bridging takes 5–10 working days. This is still less than a third of the time required for a conventional mortgage or remortgage

How does your credit history affect your application?

The majority of bridging lenders lend on a non status basis. They are primarily concerned with the property being offered as security. This means that you will not be excluded if you have a poor credit history.

What happens if you can’t prove your income or have no accounts?

As the majority of bridging lenders lend on a non status basis, there is no need for proof of income. The lender will be more concerned with how the loan will be paid back.

How much does a Bridging Loan cost?

Depending on the individual deal and the loan to value, rates range from 1% to 2.5% per month on an interest only basis. Some lenders will allow you to roll the interest up into the loan so you don’t have to make the monthly payments. This only applies if the total borrowing remains within the lenders maximum loan to value.

What are the other additional costs?

Property valuation fee – In order for the lender to accept any property as security, the lender requires a valuation by a qualified surveyor. The lender will instruct the valuation and the cost of this is paid for at the time of instruction by you. If you have already had a valuation, there is a chance that the lender will accept a re-write of the valuation.

Lenders Solicitors fees – You are responsible for both your own and the lenders Solicitors fees.

Lenders arrangement fee: These vary from lender to lender and range from no fee to 2% of the loan advance. In most cases this is deducted from the loan. Some lenders also charge an upfront commitment fee.

Exit/redemption fees – Some lenders don’t charge any exit fees, some have no exit fees after you have made a certain amount of monthly payments and some charge a percentage rate no matter how many months payments you have made. We check very carefully for you exactly what the exit fees is and advise you in writing.

How do you pay back the loan?

Bridging is not a long term solution. The lender must be sure how the loan will be redeemed. Generally this is through the sale of the property or the re-financing onto a longer term mortgage.

Why use us?

Finding a good deal on a bridging loan can be hard work because there are so many lenders offering such a wide variation in interest rates and repayment options. Not all Lenders terms are equal. The lender with the lowest monthly interest rate might not be the cheapest overall option. There are over 40 different principal bridging lenders in the market, many of whom will only accept business through experienced registered brokers. This is where we can help you save both time and money. Each bridging loan is a bespoke product tailored to your specific needs. All it takes is a quick phone call and you could be on your way to getting the best possible deal.


	What is Bridging Finance? Bridging finance is an interest only, short term loan, secured on land or property, both residential and commercial. A first or second charge will be taken against new or existing property, or a combination of both. Bridging Finance allows you to act quickly and then re-finance to a longer term solution. Speed of completion is usually critical as bridging facilities are often required to resolve a temporary cash flow problem or to meet tight deadlines. Why would you need Bridging Finance? There are many reasons why you would need to utilise bridging finance but the main one being, you don’t have much time and you need money. · ♦ Purchasing a new property before selling your existing property · ♦ You have negotiated a substantial discount for a quick completion · ♦ Last minute hitches; your offer of mortgage is revoked or the buyer of your property drops out and you risk losing your deposit. · ♦ Purchasing a property, refurbishing and adding value before selling · ♦ Purchasing a property, refurbishing and adding value before re-mortgaging to a standard lender using the new increased valuation · ♦ Buying a property at Auction. You generally only have 28 days to complete and most mortgage companies can’t guarantee to complete in that time. · ♦ Releasing equity from your own residential or commercial property for whatever reason including; Tax or VAT bills, personal or business short term cash flow, divorce settlement, purchase of a business or purchase of an overseas property. · ♦ Funds can be raised for any legal purpose What type of property can be used as security? Lenders will accept residential freehold and leasehold property, commercial property and land. How much can you borrow? The amount you can borrow is based on the value of the property being offered as security. This can be property that you already own or the property you are purchasing. On average lenders will lend up to 85% loan to value for Residential property and 80% loan to value for Commercial property. Most lenders will lend on the true value of the property and not the purchase price. You can borrow 100% of the purchase price of a property, if additional property is available e for security. Lenders will lend amounts from £25,001 to £10 million plus. What is a second charge? If you have a property with an existing mortgage, that mortgage lender will have the first charge over the property. If there is enough equity available within the property another lender can lend you additional funds and place a second charge on the property. How long can you borrow the money for? The term of the loan can run from 1 day to 12 months How quickly can you receive the funds? The main attraction of a bridging loan is that when you are in a hurry, funds can be made available to you in as little as 48 hours, but in the majority of cases bridging takes 5–10 working days. This is still less than a third of the time required for a conventional mortgage or remortgage How does your credit history affect your application? The majority of bridging lenders lend on a non status basis. They are primarily concerned with the property being offered as security. This means that you will not be excluded if you have a poor credit history. What happens if you can’t prove your income or have no accounts? As the majority of bridging lenders lend on a non status basis, there is no need for proof of income. The lender will be more concerned with how the loan will be paid back. How much does a Bridging Loan cost? Depending on the individual deal and the loan to value, rates range from 1% to 2.5% per month on an interest only basis. Some lenders will allow you to roll the interest up into the loan so you don’t have to make the monthly payments. This only applies if the total borrowing remains within the lenders maximum loan to value. What are the other additional costs? Property valuation fee – In order for the lender to accept any property as security, the lender requires a valuation by a qualified surveyor. The lender will instruct the valuation and the cost of this is paid for at the time of instruction by you. If you have already had a valuation, there is a chance that the lender will accept a re-write of the valuation. Lenders Solicitors fees – You are responsible for both your own and the lenders Solicitors fees. Lenders arrangement fee: These vary from lender to lender and range from no fee to 2% of the loan advance. In most cases this is deducted from the loan. Some lenders also charge an upfront commitment fee. Exit/redemption fees – Some lenders don’t charge any exit fees, some have no exit fees after you have made a certain amount of monthly payments and some charge a percentage rate no matter how many months payments you have made. We check very carefully for you exactly what the exit fees is and advise you in writing. How do you pay back the loan? Bridging is not a long term solution. The lender must be sure how the loan will be redeemed. Generally this is through the sale of the property or the re-financing onto a longer term mortgage. Why use us? Finding a good deal on a bridging loan can be hard work because there are so many lenders offering such a wide variation in interest rates and repayment options. Not all Lenders terms are equal. The lender with the lowest monthly interest rate might not be the cheapest overall option. There are over 40 different principal bridging lenders in the market, many of whom will only accept business through experienced registered brokers. This is where we can help you save both time and money. Each bridging loan is a bespoke product tailored to your specific needs. 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