Bridging loans are a type of short-term finance that is secured against a property, they are used to bridge the gap, either to secure a quick property purchase, before you arrange a mortgage, or to access cash tied up in a property that you already own; this can be on a first charge or second charge basis – a second charge means a charge behind your current lender.

If you are releasing funds from an existing property, the cash can be used for any purpose you choose, such as business cash flow or unexpected urgent cash requirements.

Individuals, Limited liability partnerships, and limited companies are eligible to apply for bridging finance.

A bridging loan is usually used to obtain short-term capital for a term of up to 18 months,  loans of up to 24 months can be accommodated by way of a six-month extension, should you require the loan over a longer period. Three-year loans are also available for investors on buy to let and HMO properties.

A quick completion. this might include property developers or private individuals, who often have the opportunity to secure a better deal if they are able to complete quickly or have yet to sell an existing home they own in order to purchase another property. Releasing Cash, very often Bridging loans are used to get equity out of a property to meet a shortfall in cash flow, this can then be accessed quickly, whilst longer term arrangements are put into place.

Buying at Auction, when buying property at auction, payment is usually required within 28 days of the purchase –  traditional methods of mortgage funding would not be able to complete in this time frame, with a bridging loan you can complete within the 28 days, giving you time to put a mortgage in place at a later date.

A broken chain in a property transaction, if you are in a chain and one or other of the sales falls through, a bridging loan can be used to ensure the sale completes by refinancing one or other of the properties in the chain and allowing exchanged contracts to occur.

Uninhabitable Property, many properties sold at auction are uninhabitable, which means a traditional mortgage would not be available to fund the purchase. In this instance you would arrange bridging finance based on the initial purchase and or valuation, you can then carry out the works to make the property habitable,  you would then apply for a traditional mortgage or sell the property.

Refurbishment/Development of a property, Bridging loans are a popular choice with developers who are refurbishing or developing a property, they provide short-term capital for the Acquisition and then funds for the refurbishment, on completion of the works, the property can be resold or alternative finance arranged to release the profit.

Land purchase, bridging loans are often used to purchase a piece of land that requires planning permission, once permission is granted the land can be refinanced or sold based on the enhanced valuation.

Lease extensions, bridging finance bridges the gap between the purchase and the sale or refinance, this enables you to buy at the lower price and then purchase a longer lease. A traditional lender will not lend on leases that drop below 60-80 years, meaning bridging finance is the perfect solution.

Bridging finance can be secured against Residential property including your current home, commercial and semi-commercial properties and also land with or without planning permission. Also part finished properties are also suitable to secure a bridging loan on.

• Residential property

• Residential developments

• Commercial property

• Commercial developments

• Mixed use property schemes

• Offices

• Retail

• Land, farms and agricultural

• Investment property – residential and commercial

•  Auction

Bridging lenders are not interested in a borrower’s employment status, as loans are secured on the property if however, you choose to pay interest monthly you will need to demonstrate that you have the income to cover the payments required.

Bridging loans are generally short-term loans of less than a year, although a six-month extension can sometimes be added. So any term up to one year even as little as one month is available, you only pay interest on the days the loan is outstanding. It would be wise to take one for longer than you expect, be that 3, 6 or 12 months, as once the term expires the lender would usually charge a further arrangement fee.

There is a minimum amount of £30,000 with no real maximum amount, as long as the property meets the loan to value requirement and is suitable security for the loan, then a bridging loan could also run into many millions, you can use our loan repayment calculator to work out your repayments.

As one of the UK’s top bridging loan brokers, our highly experienced consultants only deal with bridging and development finance, as such we can immediately tell you what loan you would qualify for and give an indication of what the best rates would be in your case.

Once we have gone through the terms of your application and have received the offer back from the lender, it really depends on the complexity of each case, loans have completed  in less than a week, but this would be an exception, you should really factor in 2-6 weeks depending on how quickly your solicitors reacts to requests for information. 

On completion, your solicitor would be in funds from the lender who can then release them to you, usually on the same day.

No credit checks are carried out without your full permission because bridging loans are secured on the property a poor credit record is not a problem for most lenders. Credit checks will be conducted at a formal application stage only when we have agreed to terms with you and you give us the go-ahead to do the search.

First, we have a discussion about what bridging loan would be most suitable for your circumstances, we would then send you head of terms outlining the costs of the loan and term. Once you are ready to proceed the lender would issue you with indicative terms to be signed and returned, along with identification documents for the borrower, at which point the lender will instruct a valuer and you would also both instruct your respective solicitors. As long as the valuation report is in line with the properties expected value, the lender would then carry out due diligence and progress to the loan completion and release of funds.

No fees are payable up front to the broker. The first time you would be asked to make any payment would be at the point you instruct the valuer, which would be for your property valuation.

Interest Rates are based on individual circumstances, the loan to value of the loan and type of property that is to be offered as security. With the best rates starting from 0.4% pm (4.8% pa). This would give you a monthly payment of £480 on a £100,000 loan.

Yes, you can repay the loan at any time during the agreed loan period, interest will be calculated up to the day you repay the loan and only charged accordingly. You can also use a Bridging Loan Calculator to work out the amount due, based on your loan amount.

Because bridging loans are short-term finance, the lender will want to know what your exit route is, where will you be getting the funds required in order to pay the loan off. This is usually the sale of the property that the loan is secured against or could be receipt of funds from another source, i.e a sale of shares, probate etc, the lender is looking to see that you have a means to pay down the loan once the term has expired.

Valuation costs are normally £100-£150 per £100,000 of the properties value. So if the property is valued at £300,000 the valuation would come in at around £300-£450. This is payable once you have accepted the loan offer and instructed the valuer direct.

When taking out a bridging loan you will be expected to pay both your own and the lender’s solicitors fees, the lender will agree on an amount upfront with you for their legal costs. You will have to pay this before they are instructed or get your solicitor to give theirs an undertaking that you will pay the fees on completion. The legal fees can be deducted from the loan drawdown.

Almost all lenders charge an arrangement fee, this would normally be between 1% and 2 % of the loan value agreed, this is not paid up front but deducted from the loan advance.

Bridging loan lenders generally do not charge exit fees.

Bridging loan lenders quote interest charges on a monthly basis, so if the rate was 0.4% per month it would work out at 4.8% over the year, with interest only payable on the actual days or months the loan is outstanding. So a £100,000 loan over one year at that rate would work out at £4,800 interest payable. £400 per month.

Rolled up Interest on a bridging loan is usually rolled up (Prepaid) what this means is that if say you had a loan of £100,000 and took it out for a 12 month period then on completion of the loan the lender would deduct £4,800 from the loan advance so you would get £95,200 however you would not then have to make any monthly interest payments over the 12 months. If you then redeemed the loan after six months they would repay you the £2,400 that you had prepaid so you only pay interest on the actual days that the loan is outstanding.

Monthly Interest means  you would  pay your interest monthly, like you do with a mortgage, so if you had a loan at £100,000 at 0.4% pm you would have to pay £400 every month and would receive the whole £100,000 on completion of the loan, in these circumstances you will have to demonstrate to the lender that your income is sufficient to cover the interest repayments.

Bridging loans can come in first and second charges, generally speaking, if you are looking for a first charge loan it would be up to 75% loan to value, however if you are using the equity on one property to purchase another one you can get up to 100% by using both properties as security. Second charges also go up to 75% Loan to value and as with first charge loans can be used on a number of properties to get up to 100% loan to value if need be.

Bridging loans are secured against the actual property, so your credit is not as important as it would be for a mortgage and we have many lenders who have no problems with adverse credit.  Interest rates will be higher than if you had a good credit rating but loans are available without going through a credit score rating and indeed bridging loans offer sometimes the only route to obtaining funds in order to help them with their difficulties.

Bridging loans are secured against the property with interest rolled up and not paid until the end of the loan, so no proof of income is required. If however, you choose to pay the interest due on a monthly basis the lender would ask you for proof that you could cover the monthly payments as they fall due.

When you take out a bridging loan it will be for an agreed time usually 6-12 months, after the period expires you would be required to repay the loan, if for any reason you are not in a position to do this, you would have to either ask for a loan extension or arrange another bridging loan with a different lender. Most bridging loan lenders will agree to a further six-month extension, but will usually want a further arrangement fee to do so.

Generally speaking, if the loan is to be on a property that you live in or intend to live in then this would be treated as a regulated bridging loan, these are more rigorously tested as they are treated very much as if you were taking out a mortgage with the same checks etc.

If you are not going to live in the property and or it is a loan for business purposes, then it is generally treated as an unregulated loan and not subject to the same regulations and checks as a regulated loan.

The terms of a bridging loan relate to the agreed terms, this would include the length of time the loan has been agreed over, the interest that has been agreed on a monthly basis and also what arrangement fee has been agreed. All of these things are based on the loan to value and type of property the bridge is being agreed on.

Bridge Loan Rates can vary from day to day, there are over one hundred lenders in the UK who offer Bridging Finance, so rates can fluctuate a lot, whilst some high street lenders do offer bridging loans, they are mostly serviced through specialist lenders. These lenders generally receive funding through institutional investors. You can expect anything from 0.37% per month upwards.