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  • When Time is a Factor
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  • Bridging Loans
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  • Can be a Real Lifesaver!

What is Bridging Finance?

Bridging finance, also called bridge loan or bridge financing, is an interim loan that’s used to "bridge the gap" between the acquisition of a new premises and the sale of an current one. It is commonly used by property investors and developers to purchase a property before they have sold their existing property and have the funds to complete the purchase. Bridging finance can also be used for other purposes such as renovation or refinance. The loan is secured by the property that is being purchased, and the lender will typically require a deposit or equity in the existing property as collateral.

What are the advantages of using bridging finance?

There are several advantages of using bridging finance:

  • Speed: Bridging finance can be arranged quickly, often within a few days, making it a good option for those who need to move quickly on a property purchase.
  • Flexibility: Bridging finance can be used for a variety of purposes, including property purchases, renovations, and refinancing.
  • No minimum income requirement: Unlike traditional mortgages, there is no minimum income requirement for bridging finance. This means that even those with low income or poor credit can qualify.
  • No maximum term: Unlike traditional mortgages, there is no maximum term for bridging finance, which means that borrowers can take as long as they need to repay the loan.
  • Low credit score acceptable: Some lenders will consider borrowers with low credit scores for bridging finance, as long as they have enough equity in the property being used as collateral.
  • Higher LTV: Bridging loans have higher loan-to-value (LTV) ratios than traditional mortgages, which means that borrowers can borrow more against the value of the property.
  • Interest only repayment: Some bridging loans offer interest-only repayment options, which can help to keep monthly payments low while the borrower works to sell the existing property or refinance the loan.

Why use a bridging loan?

There are many reasons why someone might choose to use bridging finance:

  • To purchase a new property before selling an existing one: Bridging finance can be used to "bridge the gap" between the purchase of a new property and the sale of an existing one, allowing the borrower to take advantage of opportunities to purchase a property without having to wait for the sale of their existing property to complete.
  • To renovate or improve a property: Bridging finance can be used to fund renovations or improvements to a property, allowing the borrower to increase the value of the property before selling it or refinancing.
  • To refinance existing debt: Bridging finance can be used to refinance existing debt, such as a mortgage or business loan, allowing the borrower to take advantage of lower interest rates or better terms.
  • To take advantage of short-term opportunities: Bridging finance can be used to take advantage of short-term opportunities, such as a good deal on a property or a temporary shortage of funds.
  • To avoid property repossession: Bridging finance can be used to avoid property repossession by providing the funds needed to pay off outstanding mortgages or debts.
  • To purchase at auction: Bridging finance can be used to purchase a property at auction, as the funds are often required to be provided on the spot.

Overall, bridging finance is an option for those who need funds quickly and have assets they can use as collateral, it can also be a good option for those who have difficulty qualifying for traditional mortgages or business loans.

Why use UK Bridging Loans?

Personal Service:

Here at UK Bridging Loans we take customer satisfaction very seriously, that is why we go the extra mile to provide the best service possible to all of our clients.

Expert Advice:

Every member of our team are highly trained and experienced in property and specialist lending products, ensuring out clients get the best products at the best rates.

Flexible Lending:

We have access to many specialist lending products that can be tailored to each individual’s need. We can offer flexible, fast and cost effective loans for clients with specific requirements. Deal direct with the lender, no middleman!

Proven Track Record:

Our track record speaks for itself through our thousands of satisfied clients. Our experience and unrivalled customer service means that we have many returning clients with whom we have built a long lasting relationship.

unique

Tech Savvy:

We use the latest technology to ensure simplicity, speed and ease for our clients as well as highly trained staff to ensure everything runs smoothly.

Tailored Loans:

We can tailor loans to suit whatever property funding need our clients may present. With access to a wide range of lenders we are able to offer specialist loans at competitive rates.

Frequently Asked Questions

What exactly is bridging finance?

A bridging loan is a short-term loan used to "bridge the gap" between the purchase of a new property and the sale of an existing one. It is typically used by property investors and developers to purchase a property before they have sold their existing property and have the funds to complete the purchase.

How does a bridging loan work?

A bridging loan is secured against the property that is being purchased, and the lender will typically require a deposit or equity in the existing property as collateral. The loan is usually for a short-term, usually up to 12 months, and the interest rate is usually higher than a traditional mortgage.

How much can I borrow as a bridging loan?

The amount that you can borrow through a bridging loan will depend on several factors, such as the value of the property that is being used as collateral, your creditworthiness, and the lender's policies. Typically, most bridging loans are based on a loan-to-value (LTV) ratio, which is the amount of the loan compared to the value of the property. Bridging loan LTV ratios can range from 50% to 90%, depending on the lender and the circumstances. So, for example, if you have a property valued at £1 million, and the lender will lend up to 70% LTV, you can borrow up to £700,000. However, it's always best to check with different lender as their policies and lending criteria varies.

How does a bridging loan differ to a mortgage?

The key difference between a bridging loan and a mortgage is how it is repaid. Bridging loans are generally repaid within 12 months by means of financing, property sale or funds from an alternative source. Unlike mortgage finance, intended to be long term.

Is a bridging loan cheaper than a mortgage?

Bridging loans are typically more expensive than mortgages because they are considered higher risk and are meant to be a short-term solution. The interest rate on a bridging loan is often higher than the rate on a mortgage, and there may also be additional fees, such as arrangement fees and exit fees. Additionally, the lender may require the borrower to pay interest on the loan in advance. However, it's always best to get quotes from different lender to compare the rates and fees.

What are the requirements for a bridging loan?

The requirements for a bridging loan will vary depending on the lender, but typically they will require a deposit or equity in the existing property as collateral, and may also require a credit check and proof of income.

Will I need a valuation?

Yes, a valuation will be needed on the property you are offering as collateral. In certain cases, it is possible we can offer a free valuation, by means of an electronic automated valuation method “AVM”. In cases where we cannot accept this, we will need a RICS valuation.

Will I need a solicitor?

Yes, you will need representation from a solicitor who will consult with our solicitor during the loan process. Ensure you chose your solicitor based on their experience in the sector.

How much does bridging finance cost?

The costs associated with a bridging loan will vary depending on the lender, but typically they will include interest, arrangement fees, valuation fees and legal fees. Bridging finance typically has higher interest rates than a standard mortgage product due the fact that lenders do the equivalent amount of work for a 12 month return as they would do for a standard mortgage which is around 25 years. The risk factor for lenders is higher too which is reflected in the cost. We are fully transparent in all cost and prices and endeavour to find the best deals for our clients at the lowest prices.

How long does it take to get a bridging loan?

Bridging loans can be arranged quickly, often within a few days, making it a good option for those who need to move quickly on a property purchase.

How is the interest rate calculated?

Generally, rates are calculated by LTV (Loan to Value), type of security, borrower profile, loan amount etc. When comparing loans, you should look at interest rates but also take into account other fees and interest to calculate the total cost of the loan.

What are the risks of a bridging loan?

The risks of a bridging loan include the possibility of defaulting on the loan if the existing property is not sold in time, or if the borrower is unable to repay the loan. Additionally, the interest rate is usually higher than a traditional mortgage, which can increase the overall cost of the loan.

How do you pay back a bridging loan?

A bridging loan is typically paid back through the sale of the property that was used as collateral for the loan. The proceeds from the sale are used to pay off the outstanding balance on the loan. Some lenders may also allow the borrower to pay back the loan through other means, such as refinancing or by obtaining a long-term mortgage. It's important to note that most of the bridging loans are short-term loan, and they are to be paid back within 12 months. It is essential to have a clear exit strategy in place before taking out a bridging loan, as failure to repay the loan on time can result in the lender taking possession of the property.

Are my personal details kept confident?

For data protection purposes we are registered with the Information Commissioners Office. We take client confidentiality very seriously and never pass any personal details to any non-related party. Full details of our data protection policies can be produced upon request.

Contact Us

Contact Details

pinBusiness Address: Office block 2, Kibworth Business Park, Kibworth Harcourt, Leicestershire, LE8 0EX

callTelephone:  0116 464 5554

Opening Hours

Mon - Thurs: 9am - 9pm

Fri: 9am - 5pm

Sat: 10am - 5pm

Sun: 11am - 5pm


For job vacancies please email us on jobs@bridgingfinance.com