Bridging Loans & Bridging Finance
Short-term, flexible funding options that will help you ‘bridge’ the gap between your available capital and your future. Get a FREE, no obligation bridging loan quote today.
Secured Bridging Loans
Secured bridging loans are the most popular form, securing the loan against an existing property brings better interest rates and more interest from lenders. Find out more here.
Unsecured Bridging Loans
Unsecured bridging loans are harder to get hold of as banks normally insist on securing your loan against a property/asset of some kind. However, we are approved to offer this option to customers. Find out more here.
Submit An Enquiry Online. Find out how much you can borrow today.
What Is Bridging Finance? Bridging finance is a type of loan that gives you a helping hand in getting from one step to the other.
This form of loan is widely used as a temporary solution, specifically meant for a short-term purpose. Essentially, this can provide someone with the quick cash injection they need to move forward. Funds are usually made available within a reasonable amount of time, ideal for those with a short timeframe. Bridging loan companies can help prospective property buyers secure their home by alleviating the financial gap between old and new mortgages. Ideal for those moving on from their first home. Bridging loan reviews suggest that bridging finance is a useful tool that can be greatly beneficial in a number of scenarios, including property acquisition and refurbishment projects.
Eligibility for bridging finance determined by bridging loan companies on a case-by-case basis. Due to this individualised approach, we have no set criteria for applying. Those who are eligible for bridging finance include:
- Companies and individuals
- Clients who are 18 years of age or over
- Clients with a perfect or weakened credit history
- Clients who are employed, self-employed or not employed
- Clients with property in poor condition
If you’re looking for a loan but are unsure of your eligibility, don’t hesitate to contact us for more information.
What Is The Process?
The 5 Step Process
The Bridging Loan Process Explained The entire process of applying for bridging finance can typically take anywhere between 7 to 28 days.
Overall, it’s recommended a bridging loan should be used to ‘bridge’ the gap for up to a maximum of 12 months. If you require a loan for any longer than 12 months, it’s likely a bridging loan isn’t the right option for you.
Find more information about the application process and what to expect on the right hand side. This will give you useful tips on the stages you will need to go through. Don’t worry though, we will guide you through the process as you go.
1. Processing The Application
Providing your application is approved, it will then be processed as quickly as possible. Documentation will be required to support your application. We will then send your details to the lender.
2. Client Quote
Your loan options will be discussed during your initial enquiry. You will be asked a number of questions to gain information such as: how much you’d like to borrow, how long you need the loan and what you will be using it for. Once you have provided this information, an advisor will contact you to further discuss your application in due course.
3. Legal Department Instructed
The role of the solicitor will vary depending on the circumstances, so the time this step takes can vary. The solicitor will receive the necessary papers for completion from the lender.
The lender will instruct a surveyor to carry out the valuation on the property. Note that a valuation may not be needed if the property has recently been surveyed.
5. Finalising Your Bridging Loan
You will be issued a formal offer with documentation to sign. The solicitor will then finalise the legal process to release the funds. The funds will then be transferred to you (the time this takes may vary). Following the release of funds, you will then have until the agreed date by which to pay back your loan. You will have agreed to an “exit” route, which details to us how you plan on repaying what you’ve borrowed.
Compare Bridging Loans The ideal loan for you will take into account your circumstances, i.e. what you’re using it for, and how long you need it.
Finding the best loan for you can be a confusing time with so many types of loans available. What exactly are you looking for when you compare bridging loans? Here are some key things to consider:
- What is the maximum LTV (loan-to-value)?
- How long can you take out the loan for?
- What is the maximum you can borrow?
- What would be the monthly interest rate?
There are many bridging loan companies that offer good terms but with bad rates. Therefore, you’ll need to analyse which is most important to you. A lender may be cheaper, but they may not be able to offer you as much and they could be stricter upon application. Choosing the right bridging finance for you can be confusing. To make the process easier, try our bridging loan calculator to find the best deal for you. If you ever find yourself unable to repay a loan, consider an IVA rather than opting for bankruptcy. Learn more about IVA’s here.
Bridging Loan Example If you are looking to secure a property, you may wish to apply for bridging finance before you miss out. In many cases of people looking for a loan, the sale of their current property has not yet been completed. That’s where our loan comes in.
This example is working on the assumption that the applicant needs a £100,000 loan as they have the remaining costs in cash. We would then be able to lend the client the £100,000 required to secure the new property.
Costs Typically bridging loan costs consist of an arrangement fee and then your monthly interest rate which is paid in a lump sum at the end.
In the instance that the property is sold after 6 months, the initial £100,000 loan and fees from the sale will then be used to repay the bridging finance. The balance will be given to the client.
How does repayment work? The loan will be taken from the sale of the property, in this case it’s £600,000.
The total amount to repay with then be calculated combining the borrowed amount, fee and interest. The remaining balance is the sale of the property, minus everything borrowed. This will then be released to the client.
Typically, the lower the LTV, the better the interest rates. This is because the LTV used to determine the interest rate or define the maximum you can borrow is calculated from the gross loan. That’s why it can be beneficial for the borrow to use more properties, if available. This will reduce the overall interest rates. For further information on the loan process, see our info page for help and advice.
The ``Exit Route`` There are many methods for repaying your bridging finance, also known as the “exit” route.
The loan can either be cleared in full or moved on to another permanent form of finance – for example a mortgage. The exit process depends on whether your loan was open or closed. A closed bridging loan has a fixed cut-off point whereby the loan must be paid. On other hand, an open bridging loan has no repayment date specified. This means you can decide how much you wish to pay off, and when.
We would advise that you take out bridging finance for the maximum amount of time. Should you encounter any delays with your exit route, you will have more time to repay the loan. If you repay the loan quicker than you anticipated, you’ll only be charged the interest rate for that period of borrowing. For example, if you arranged the loan on a 12 months term but you are able to repay it within 7 months, you will be liable for interest in the first 7 months only.
When it comes to paying interest rates, in some cases it can be ‘rolled up’ so you pay one lump sum at the end of the lending period. However, there are also options for it to be paid back monthly. If you’d like to take a further look into our bridging finance options, try our bridging loan calculator. We will work together to find out what would best suit you.
What is bridging finance & how does it work?
Bridging loans, whether home or commercial, are designed to help people “bridge the gap” between their finances. All you need to do is tell the lender how much you’d like to borrow, and they’ll provide you with a quote. Then, if approved, you pay the loan back within the agreed period.
If it’s a closed loan, then you’ll need to pay it back within the cut-off date. On the other hand, for an open loan, there is no specified repayment date which means you can pay it back as and when you’re able to.
How do home bridge loans work?
Many people require a bridging loan to help them when they’re in-between moving house. This is primarily used when you’re waiting on the sale of your previous home but still want to secure a new one. It can also be used to help with renovation works or for development projects. A home bridge loan gives you flexibility when you need it most.
How much can I borrow?
The exact amount you’re able to borrow completely depends on your personal circumstances and what you can afford. To calculate what you can borrow, we need to take into consideration several factors, such as:
- Your income
- Your monthly expenses
- The amount you can afford as a deposit
To get your quote for a bridging loan, just head to our contact page and fill out our simple form.
What can I use a bridging loan for?
A bridging loan is typically required for property, and it can be used for any commercial or residential purposes. It offers a short-term financial solution for various situations. For example, it may be used if you want to secure a home while waiting for the sale of an old one. It can also be used by those who want to acquire commercial premises but don’t have funds immediately available.
What are the different types of bridging loans?
Open, closed, secured and unsecured are the four main types of bridging loans. Each offers something different and the type you require will depend on your circumstances. As well as this, there are also mezzanine finance, commercial and residential development loans.
Open and closed loans refer to the repayment period you’ve agreed with the lender. A closed loan is when there is a date by which you need to pay the loan back. An open loan means there is no set repayment period. The latter is typically only granted if you have a good credit score.
A secured loan allows you to take out a loan against your possessions, for example, your house or car, this can be beneficial for those who don’t have a good credit score. On the other hand, an unsecured loan doesn’t require you to offer up any of your assets as collateral.
For more information, visit our loan types page.
How long before I find out whether my application has been approved?
You’re likely to hear back about whether your application has been accepted within 7 to 14 days. However, the process of applying for a bridging loan can take anywhere between 7 to 28 days from application to payment.
Can I get a bridging loan with bad credit history?
Yes, in many cases it is possible to get a bridging loan with bad credit history. A secured loan is your best option because the loan can be taken out against the value of your assets. That means, should you default on your repayments, you stand to lose those assets. This way of lending can be beneficial for both you and the lender.
We assess whether someone can be granted a loan on a case-by-case basis, so even if you have got bad credit history, you can still apply.
What is development finance?
Development finance is a short-term lending solution for those who need to renovate a residential or commercial property. This can mean anything from funding light refurbishments to large scale construction projects. What’s more, it can also be used for land purchases.
For more information about the options available, take a look at our development finance page.
What does LTV mean?
LTV means Loan-to-Value. This describes the ratio of a loan to the value of the property purchased, which means it’s typically only applicable to loans used for commercial or residential purposes. It’s one of the most important aspects a borrower should look at before choosing a bridging loan company.
Can a bridge loan be used to finance land development?
Yes, a bridging loan can be used to finance land development. In many cases, this type of development finance is used by an entity to cover construction projects and land purchases. This is particularly useful for property developers who are looking to expand their portfolio but need an extra cash injection to help them along the way.