What is a Commercial Bridging Loan?
These are short term loans which are secured on commercial property such as offices, shops, hotels, restaurants, factories, warehouses and care homes; semi commercial property which typically includes living accommodation and which could apply to Offices, shops and restaurants and land such as development land with planning, farmland and land without planning. This type of loan could be used by businesses, partnerships, sole traders, limited companies, offshore companies as well as by individuals in order to obtain loans that can range from £25,000 to £1 billion.
Latest Commercial Bridging Finance Offers
View some of the latest regulated offers from leading lenders.
Product BF10Apply Now
|Interest Rate 0.65%||Lender Fee 2%||Max LTV 50%||Max Term 18 Months||Min-Max Loan £50,000 - £10,000,000||Security Type Commercial||Regulated? No|
Product BF0025Apply Now
|Interest Rate 0.75%||Lender Fee 2%||Max LTV 55%||Max Term 18 Months||Min-Max Loan £100,000 - £5,000,000||Security Type Mixed Use & Commercial||Regulated? No|
Product BF25Apply Now
|Interest Rate 0.99%||Lender Fee 2%||Max LTV 75%||Max Term 24 Months||Min-Max Loan £50,000 - £10,000,000||Security Type Commercial||Regulated? No|
The other key benefits of procuring such a loan is:
- It can cover all types of property, land and property construction, refurbishment or conversion-even those properties in a poor state of repair
- Commercial bridging loans are available up to a maximum of 75% of the property’s value
- The loan term can be anything from 1 month to 36 months.
- Even those with adverse credit history can be considered for such a loan.
- Any security will be considered
- Various exit routes can be considered
- With our assistance you can obtain fast quotes, written terms and un principle decisions. It is possible for funding to be secured within 48 hours.
- Whole of the U.K. can be covered
Typically, a commercial bridging loan can be used for many things including but not limited to the following:
- Purchasing property
- Property developments
- Stop repossession
- Pay urgent tax payments
- Expansion of business
Commercial bridging loan fees, interest rates and costs
Here you will find a difference to loans secured against residential properties. This is mainly because of the more complex nature of these loans-there are fewer lenders as there is more risk involved for lenders. As a result, loans secured against commercial properties will be more expensive. In considering the costs, the lender will consider the type of commercial property being used amongst other factors and the interest rate charged will reflect the lenders consideration of risk for each type.
For example, if we take interest rate for a bridging loan on a commercial property and we take 50% as the loan to value then it may be that 0.7% interest rate is payable per month and with a semi –commercial property or for a development on land with planning permission with the same loan to value, then the interest rate would be 0.65%. You can see that the rates are slightly higher for a commercial property than for the others mentioned. For land without planning permission, (whereby you can only obtain a maximum of 55% of loan to value) and for farmland (whereby you can only obtain a maximum of 60% loan to value) the interest rate would be 0.75% per month. 1% may be considered a good average benchmark. But for a riskier deal where the borrower has heavy adverse credit or if it is a complex commercial deal then rates can increase to 1.75% per month.
Apart from interest rate charges, what are the other fees and costs that may be payable?
- 1) A lenders arrangement fee, sometimes referred to as a facility fee:This may be up to 2% of the net or gross loan amount. As the loan amount increases, the lender’s arrangement fee decreases in stages. So a loan amount of £400,000 would attract a lenders arrangement fee of 2% whereas those looking to borrow £1 million may only have to pay a lender’s arrangement fee of 1%.
- 2) Valuation fees-if you do not have a recent valuation report to hand, then lenders will usually require a valuation to be carried out at your own cost.
- 3) Legal Fees-the lender will request that you pay their own legal fees as well as your own.
- 4) Exit fees- in the majority of cases this will not be applicable-but some plans do have an exit fee which can range from 0.5%-1% of the net or gross loan amount. This will be added once the loan is redeemed and taken from that amount and so interest will not be charged on a monthly basis.
- 5) A telegraphic transfer fee (TT): Banks will typically charge around £30-£45 to the borrower to send large amounts of money out to a lender’s solicitor who will then send it onto the borrower’s solicitor.
You will be glad to know that Finbud do not charge any broker or packager, success or commitment fees.
What evidence will you need to provide in order to obtain such a loan?
The lender will want some kind of proof that the borrower intends and is able to pay back the loan i.e. through the refinance of a property or other way. The lender just needs to see what plan the borrower has in place to repay the loan and ensure that it is a viable one for the amount and type of loan taken. A poor credit history will not be held against you when trying to obtain a commercial bridging loan as long as you can show a feasible plan for paying back the loan.
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