Bridging Loan Facility

What is a bridging loan?

A bridging loan is a type of short term loan which can allow you to quickly access relatively large amounts of money for a variety of purposes. They are most commonly used for property purchases where more traditional options, such as a mortgage, are not available.

Bridging loans are usually offered over up to 12 months, although some lenders may allow you to repay over up to three years.

Bridging loan facilities offer several advantages to borrowers:

• Fast access – loans can often be arranged within a matter of days

• Flexible borrowing terms – you can usually repay early

• Flexible interest – most lenders often the option to roll up your interest and pay it in one go when the loan term ends

When to use a bridging loan facility

Bridging loans are generally used where speed is of the essence or other finance is not an option.

Common uses include:

Property auction finance – Auction purchases normally need to be completed with 28 days (20 business days), which is not usually enough time to apply for a mortgage. A bridging loan allows you to complete the purchase, then gives you time to secure a mortgage to repay the bridge.

Unmortgageable property – If a property is deemed unmortgageable e.g. it has no functional kitchen and bathroom, you will not be able to get a mortgage until this is rectified. A bridging loan facility can allow you to borrow the money to buy a property and renovate it, bringing it up to a mortgageable condition.

Buying a new home before selling your old one – If you find your dream home, you likely want to move fast to secure the property before someone else beats you to it. A bridging loan can mean you don’t have to wait to sell your own property, but can buy the new one straightaway, then sell your old home at your leisure and use the proceeds to repay the bridging loan.

Development finance – Bridging loan facilities are often used by both private and professional property developers. They can allow developers to jump on a new opportunity even when their capital is tied up in existing projects. The bridging loan can then be repaid with the proceeds of selling the development or another site from the developer’s portfolio.

How much does a bridging loan facility cost?

The cost of bridging loans varies, but in general you will pay:

• Interest on the capital

• An arrangement fee

• An exit fee (in some cases, depending on the lender)

Your interest rate will depend on the usual things, including:

• How much you borrow

• The length of the loan term

• Your credit rating

• What percentage of a property’s or development project’s value you need to borrow

• How much debt you already have

Find the best deal on a bridging loan facility

Bridging loans tend to be more expensive that other forms of secured borrowing, such as a mortgage, due to the higher interest rates they generally come with. It is therefore important to make sure you shop around and find the best deal possible.

Our highly experienced, independent bridging loan brokers have access to all the leading lenders across the market, including many not available direct to the public. That means they can offer the very best interest rates and fees on the money you need.

Use the form above to get in touch with a member of our team or give us a call on 0117 313 6058.