100% Bridging Loans

When looking to purchase a property using a bridging loan for the full purchase price of the property, you’ll need a 100% bridging loan, or a 100% loan to value (LTV) bridging loan.

The 100% refers to the fact that 100% of the transaction is being funded and you will therefore not have to put down any deposit.

To do this, the lender will need to ensure that they don’t take an undue risk, so will require one of two things. Either additional security over another property, or the property must be being purchased for significantly less than its current value.

In this guide, we break down what 100% bridging finance is, whether you could qualify, how these loans are structured and how to get started.

If you think your transaction may qualify for 100% lending, get in touch now and if it does, we can give you a formal agreement in principle in 1 hour.

What is a 100% bridging loan?

A 100% bridging loan is a form of short-term property finance that allows you to purchase a property without the need for a deposit.

Like any bridging finance product, they are arranged for anything from 1 month to 18 months, although some products may allow you to borrow for longer.

These products are popular with property investors who are looking to use bridging loans for flipping houses, or those who are looking to build a large portfolio without having to keep putting down deposits.

Read more – Auction finance calculator or Bridging loan for auction property.

Which transactions qualify for 100% lending?

The key to this type of borrowing is to ensure that your proposed deal will qualify for 100% funding. There are 2 key transaction structures that can fit. They are:

Below market value

When a property is purchased for less than it’s open market value, it is called a below market value transaction among property professionals.

Property investors use below market value bridging loans to purchase properties at 25-30% below their market value and when they do, can purchase without the need for a deposit.

It’s important to note that the purchase needs to be below the property’s current value, not a future valuation after refurbishment or similar has taken place.

The key to this is how the low purchase price has been agreed and whether the lender’s valuer will agree with your valuation.

For this to happen, the property must not have been placed on the open market for less than what you believe to be the current open market value.

Equally, the purchase can’t take place at auction, as any purchase at auction is considered to take place at market value. This is because it takes place in a room full of property investors who are looking to purchase a property.

These loans are only available for unregulated bridging loans. In all cases, regulated bridging loans require additional security or a deposit.

Additional security

The second option is to use a second property as additional security for the purchase of the first one.

This approach sees you borrow 100% of the purchase price of the new property, whilst remaining at a reasonable loan to value of 70% or below across the combined LTV of both properties.

Can I get a 100% bridging loan?

If your proposed purchase meets the above criteria and you have a solid exit strategy, there is a good chance that you’ll qualify for 100% bridging finance.

The key is that the purchase is either sufficiently below market value, or there is another property that allows you to leverage additional equity.

How much can I borrow?

We can arrange 100% bridging loans from £75,000 with no maximum loan size.

We offer a specialist range of large bridging loans for transactions over £1,000,000.

We can arrange lending up to 80% of the property’s open market value.

How much will it cost?

The costs of a bridging loan are made up from two parts, the fees charged and the bridging loan rates paid.

Bridging loan interest rates start at 0.39% per month, with most transactions falling in the 0.65-0.85% range.

Below market value transactions with no additional security may sit at the upper end due to the disproportionate level of risk passed on to the lender, with the borrower putting no money in.

On top of the interest costs, you can also expect to pay for a valuation, plus a lender arrangement fee of 1-2% of the loan amount and some legal costs.

To understand the full costs, try our bridging loan calculator.

What will I have to provide when I apply?

When you apply for this type of finance, you will be expected to provide:

• Proof of ID
• Proof of address
• Details of your planned exit strategy
• Details of the security property or properties
• If the transaction is BMV, details of why this is happening

How do I get started?

The easiest way to get started is to get in touch with the team at ABC Finance.

We can quickly assess your application and give you written terms within 1 hour.

If you’re happy with the terms offered, we can submit your application the same day and manage the whole application process for you, making it easy.

Fill in a form now to get started, or call us on 01922 620008.