Short Term Bridging Loans

Short Term Bridging Loans are type of loan used either to buy a property when you need a quick purchase or for the release of equity that you have in a property to fund either a shortfall in your cash flow or release capital for other uses. They are used to bridge the gap between to funding options.

Generally speaking, Short Term Bridging Loans could mean anything from 1 to 12 months although as it normally takes anything up to a month to arrange a bridging loan it would be very rare that a loan was taken out for less than 3 months. However there are instances where a loan could be taken out for a very short period of time in order to complete a property purchase and then resell on immediately afterwards, these are really like a short term  traditional mortgage it should be noted however even with this type of bridging finance it will have taken some weeks to arrange it before.

At Top 10 Finance we specialise in arranging short-term loans, with over 10 years of experience we are confident we can meet your funding requirements. Because short-term finance needs to be arranged quickly you need a Finance broker who can act quickly, who will deal with valuers, solicitors, and the lender in order to get the loan completed in time.

Most bridging lenders will do terms from as little as one month, in fact, it is sometimes better for them to remember, the shorter the loan is. As when the arrangement fee is added a loan of one month at say 0.5% interest per month would return them 2.5% on their funds this is equal to over 30 % per year. If the same loan were to be repaid over twelve months the return on their capital is going to be just  8% that is obviously of less interest. So many niche lenders work in this area of bridging finance.

Factors for interest rates

All our rates are updated daily to ensure you get the best loan available for your circumstances. We are also fully registered with the financial conduct authority.

Bridging Loans & Development Finance

We pride ourselves on the fact that we are well known in the industry for our professionalism and the ability to get deals over the line when other brokers would not. Bridging Loans & Development Financing are both specialist areas of finance and you need a specialist broker to understand your situation and what is available for your needs.

Once you make your Loan application we are here to help and guide you through the process with the minimum amount of effort, in order to achieve your goal, we will take your calls 24/7 and deal with all of the pitfalls along the way.

There are many factors that can affect the monthly interest rate of the loan, and the rate can change greatly based on the scenario.

LTV

When buying property the loan to value, which is the percentage of the value of the security that is the loan amount, often can greatly affect the monthly interest rate. The lower the loan to value, the less risk there is for the lender if selling the security is necessary. Due to this, if the loan to value is low such as below 60%, the interest rate can also be much lower. You can use our bridge loan interest calculator to work out what your payments would be.

Credit History

Another factor that can change the monthly interest is the credit history of the client. Even though most lenders will lend to people with poor credit history, bankruptcies, arrears and defaults can increase the rate as they all indicate a higher risk for the lender. If none of these issues is present, a lower interest rate can be expected.

Income and Employment

The income and employment of the client can also affect the interest rate on the loan. If the client has a high monthly income, this increases the chance that they will be able to pay for the loan and keep up with monthly payments, meaning better rates are more likely to be offered.

Security Location

The location of the security can also change the rate. London is a very competitive area and would offer the best interest rates. Places like Scotland have a much smaller (but still present) number of lenders due to differences in law and competition.

Property condition

A key factor is the condition and type of property that the security is. Residential properties are the best securities as they retain their value and come with little risk of a drop in property value. Commercial properties generally come with a higher interest rate. This is mainly due to the fact that they are much less stable and have the potential to drop in value quickly. The condition of the property, whether it is perfect or in a state of disrepair also comes with an influence on the rates. The worse condition the property, the more difficult it would be to sell so a perfect property is most desirable. Despite this, many lenders would definitely still lend to people with dilapidated securities and a bridging loan should not be ruled out.

1st, 2nd or 3rd Charges

The legal charge on the property also affects the interest rate. A first charge is most desirable as it poses the least risk because the property is not being used by different lenders as a security. Third charges are rare and many lenders would not take one but the ones that do would definitely have a much greater interest rate.

Term Length

Loans beyond the average term of 12 months have fewer options than ones around that ballpark. Fewer options for rates arise for very long terms. Bridging loans don’t typically extend beyond 18 months.

So to recap Loans are available for as little as 24 hours up to 12 Months.

Note we are authorised and regulated by the FCA although not all bridging loans are FCA regulated. If you are taking out a loan secured against your existing home it will be regulated and as such you could lose your home if you do not keep up the monthly payment.

Short Term Bridging Loans are type of loan used either to buy a property when you need a quick purchase or for the release of equity that you have in a property to fund either a shortfall in your cash flow or release capital for other uses. They are used to bridge the gap between to funding options.

Generally speaking, Short Term Bridging Loans could mean anything from 1 to 12 months although as it normally takes anything up to a month to arrange a bridging loan it would be very rare that a loan was taken out for less than 3 months. However there are instances where a loan could be taken out for a very short period of time in order to complete a property purchase and then resell on immediately afterwards, these are really like a short-term traditional mortgage it should be noted however even with this type of bridging finance it will have taken some weeks to arrange it before.