1) What is a bridging loan and how does it work?
Literally it means ‘bridging the gap’ and is a type of short term finance which can be arranged very quickly. It is usually secured against property or land.
2) How long will it take to complete?
This will depend on several factors such as the complexity of the case and the lender’s own timescales, but usually you are looking at up to two weeks to complete.
3) How much can I borrow?
This will depend on many factors including the value of the property and type of security being offered.
It is possible for us to fund up to a maximum of 80% of the property value and up to 100% of the purchase price. This is based on the gross loan (including all fees and interest) and the net loan (without fees and interest) would be between 5-10% less than the figures stated. But there will be variations depending on the lender.
If you can provide additional security, we may be able to secure 100% of the property value.
4) What type of security do you accept?
We can accept that you lend against the following security
- Land (with or without planning)
Some lenders will consider other types of security and we can discuss this further with you if this is something you would like to know more about.
5) Apart from interest rate charges, what fees will I have to pay?
The lender will charge an arrangement fee once the application is successful. You will also have to pay for a valuation report on the property as well as any legal fees. The arrangement fee and legal fees will be rolled into the loan amount that will need to be repaid at the end of the term with accrued interest.
6) Do you charge broker fees?
We will not charge you any broker fees or any upfront fees. However, the lender will charge a lender arrangement fee and there may be other fees to pay. Please see the Rates and fees section above.
7) Will I need to pay anything upfront?
The only thing will be the valuation report, if required. Later on there will be legal fees and other fees to pay.
8) What about early repayment charges?
You will be glad to know that most bridging loans do not have early re-payment charges, although any information regarding a penalty a lender may impose will be provided to you upfront.
9) Can I make re- payments during the loan term on my net bridging loan balance?
Yes- you can! Lenders will allow you to do this which in turn will result in reducing the outstanding loan balance. By doing this you can also reduce your monthly interest charges if you pay such charges and they are not rolled into the loan.
10) What if I cannot re-pay back the loan at the end of the term?
Before giving out the loan, lenders will want to know how the loan will be repaid and what is your exit strategy. The exit route provided must be a viable one, otherwise the lender will not lend.
The exit route would typically be the sale of property or refinance. It is usual for lenders to do some kind of due diligence if re finance is proposed as your exit route. For example, at the outset lenders will do checks on a borrower’s credit to ensure that it is good enough to achieve a refinance at the end of the term and the income is sufficient to raise funds via re-financing to repay the bridging loan as well as interest rate charges and fees.
It is usual for lenders to contact borrowers three months prior to the end of the term in order to assess the continuing feasibility of the exit route. If they believe that the exit strategy proposed is now looking less likely to succeed, then they will make suggestions such as reducing the asking price of a sale to help the borrower sell and make the exit strategy viable once again.
The lenders will work closely with borrowers to ensure that a plan is forthcoming if they overrun.
11) Do you just provide bridging finance to individuals?
No, we can provide bridging finance to sole traders, partnerships, and companies amongst other types of structures.
12) I have adverse credit history; will I be able to get a bridging loan?
The short answer is yes. There are lenders who will provide bridging loans for those who have a history of adverse credit.
13) Do I need to provide proof of income to secure a bridging loan?
This will depend on the lender’s own criteria. We can help you find a lender who will not require this if this is one of your requirements.
14) Will I be able to get a second charge bridging loan if my first charge lender will not allow it?
There are some lenders who will be able to arrange this by securing their interest by way of an equitable charge. This will enable you to obtain a second charge bridging loan. Once this is done you will not need concern yourself with obtaining permission from the first charge lender prior to entry onto the land registry documentation.
15) Do you offer bridging loans for overseas applicants?
Yes, we can do this.
16) How quickly can you offer terms?
With our breadth of experience, we understand exactly what lenders require and what can make an application successful. We have worked hard to make our processes as smooth as possible and aim to provide terms within as little as two hours.