Bridging loans provides a short-term borrowing facility, secured against property that can be used for several different reasons. One of the most common uses is to allow buyers to purchase a new property before they have sold their current home. It is also typically used to fund renovations and new builds prior to a traditional mortgage being secured or sale of the property to uplift the value.
Using bridging finance to bridge the gap between buying a new home and selling your current home works by utilising the equity in the property you are selling as a deposit on the property you are purchasing. It is also possible to use other properties you own, or the property you are purchasing to borrow up to 100% of the prospective purchase price. In cases where ample equity is available most lenders will also consider additional borrowing and for a variety of reasons, such as renovation of the new property.
Bridging loans are not only available to individuals but also can be used by businesses as there are a variety of specialised loans on offer for both commercial and residential. Commercial finance provides easy access to short term funding for businesses who meet the criteria. Eligibility is often reliant on a viable exit strategy. The funds can be used for a variety of reasons including a boost to working capital and short term cash flow issues.
It is important to note that due to the accessibility, the interest rates tend to be high, and collateral will usually be needed.
Businesses often turn to bridging loans when waiting on long term funding. For example, a start-up company engaged in raising equity finance only due to close in 6 months may opt to use this type of finance to cover all costs in the meantime. Costs such as rent, utilities, payroll, inventory etc. could all be covered.
Bridging loans can be used for a variety of purposes with the following being the most common:
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.
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.
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!
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.
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.
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.
A bridge loan is a short term loan, typically with a term of between one and twelve months, designed to bridge a gap when funding is needed quickly and for a short period of time. Funding can usually be arranged within days and can be used for a variety of purposes until further funding becomes available, usually through resale or finance. A bridging loan and a mortgage are similar in underwriting and legal processes and the requirement of a second charge secured against a property; however, a bridge loan typically completes in ten days.
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.
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.
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.
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.
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.
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