What Is A Bridging Loan?
A Bridging Loan is a type of short-term loan used to ‘bridge a gap’. They are often used to secure funds quickly to cover a pressing need.
The main reasons people choose to ‘bridge a gap’ are the following:-
- Auction purchases
- Purchase or refinance of a property in need of refurbishment
- Release funds quickly to pay unexpected bills
- To cover mortgage delays
Of course, there are many other reasons that a person may need to raise funds quickly and due to the simple nature of certain lenders application processes, a bridging loan can be an appealing option.
How Does The Bridging Loan Process Work?
- Get in touch with us by either enquiring through our website or giving us a call on 0800 088 6008 and for a no-obligation conversation with a bridging loan expert. We will talk through your circumstances and offer initial terms on the lowest rate available to you.
- We will send out a decision in principle within 1 hour outlining the terms available from the best bridging loan companies including any fees and charges that may be payable. Before issuing terms we always ensure the lender will be appropriate in terms of both costs and how quickly they can complete the transaction.
- Once you are happy with the terms and understand exactly how the product works we will start the application with the lender. We would then instruct the valuation (if one is needed on your application) and legal process as soon as they are happy with the information received. In cases that are less urgent, we are able to delay the legal work until you are happy with the results of the survey.
- Once this work’s done you are free to drawdown on your bridging loan and complete on your property transaction/refinance.
Often people are keen to find out how long the whole application takes from start to finish. This is an area where the marketing materials tend to be extremely bullish. As a result, the average time to complete a bridging finance application tends to be underestimated. The reality is that the average time across the market to complete a bridging loan as of Q1 2017 was 50 days.
This can be put down in part to the additional time taken to process regulated bridging loans and of course particularly complex cases. Both of these will push the average well up, with some complex cases taking months to complete. Most loans, however, will complete in 7-14 days.
We are able to complete in under a week, as required. These loans will tend to be at a slightly higher interest rate, specially treated as urgent by the lender or have a very low risk of financial loss for the lender in the event of default.
If your application is especially urgent, let us know straight away and we will manage the application to your timescales.
Do You Have A Minimum or Maximum Loan Size?
No – As a whole of market bridging loan broker, we have products to suit almost every enquiry.
We don’t operate a strict minimum or maximum loan size and offer loans from £5,000 up to £80,000,000+.
Do You Offer Regulated Bridging Finance?
Yes – We are fully FCA regulated and as such are able to work with regulated mortgage lenders to secure you lending against residential owner-occupied property.
A bridging finance application will be classed as regulated when it is arranged against a property in which at least 40% of it is occupied as or in connection with a dwelling by the borrower or an immediate family member.
This means that if you live in the property that you want to raise your bridging loan against, the loan is regulated by the Financial Conduct Authority.
This will lead to a stricter underwriting process and will lead the lender to take more interest in your personal circumstances. They will want to be clear on affordability, also your method of repayment will be more strictly enforced and your loan will likely take slightly longer than unregulated loans.
Do You Have Ties To Any Particular Bridging Finance Companies?
No – We are a whole of market mortgage broker and assess your application based on your individual circumstances and secure the best possible terms for you, negotiating with lenders to secure lower than usual rates or to increase lending above the usually agreed limits if required to do so.
What Types Of Property Do You Lend On?
We can offer bridging finance on both commercial and residential property. All types of property can be considered, below are some examples:
- Residential Property
- Industrial & Warehouses
- Uninhabitable Properties
- Care Homes
- Retail Unites
- Farm Land
We can only cover a small selection in the scope of this page, but if you have a property you wish to discuss get in touch and we will be happy to consider it. Through our connections at many lenders we can lend on almost any security.
Are Your Bridging Loans Available To People With Adverse Credit?
Yes – if you have adverse credit, there is a high chance we will still be able to provide you with a suitable product.
Certain lenders would be unwilling to lend to you and as the level of adverse credit increases less and less will be willing to lend. This is mainly due to the fact that if the exit route is a refinance onto a long-term loan it is less likely that a new lender will lend. If the exit is via a sale of the property the bridging lender may take a view and still accept the application. This will potentially reduce the maximum loan to value and increase the interest rate you pay.
Lenders will tend to consider missed payments on property-backed debt, such as a mortgage or secured loan as worse than other issues. Missed payments on things such as a mobile phone contract or missed electricity bill. As with other types of finance, lenders will take into account your credit history as a factor that either increases or decreases the likelihood of default. This will then be used to calculate pricing.
We have a team of experts ready to talk through your application and our extensive contacts at lenders mean we can usually able to get your application agreed despite previous issues, whether that is credit or other issues in the past.
Why Should I Work With ABC Finance?
Bridging loans can become complex. We have gained vast experience in dealing with many bridging finance companies to secure the best possible terms for the thousands of clients we have helped in the past.
By utilising that experience, we believe we are an ideal partner in raising a bridging loan, whether you are a veteran or taking the first steps into the world of bridging. There are many bridging finance lenders and therefore understanding all of their criteria can be time-consuming.
We speak with bridging loan companies on a regular basis to ensure we are fully up to date with criteria meaning we can secure the best rates quickly.
For free no obligation advice, enquire online now or call 01922 620008 to speak to one of our ABC Finance bridging loan experts. Alternatively you can compare bridging loan products, or try out our Bridging Loan Calculator.