Commercial Bridging Loans
Bridging Loans For Commercial Property
Find out how bridging finance works for commercial property transactions and get the best deal with ABC Finance
Over 30,000 loan-seekers helped
FCA Authorised – Fully regulated
Receive your funds in as little as 5 days
Market-leading interest rates
CeMAP Qualified Advisors
No Broker Fees
Author: Gary Hemming CeMAP CeFA CeRGI CSP
20+ years experience in bridging loans
Commercial bridging loans allow you to borrow money to purchase or refinance a commercial property quickly.
A bridging loan is an ideal option for those who need to complete in a month or less and can’t wait for a commercial mortgage application to be completed.
Key product features
Key Features
Max LTV
Up to 75%
Interest rate
From 0.55%per month
Charge types
1st, 2nd & 3rd considered
Term
1-36 months (maximum 12 months for regulated loans)
Interest type
Added to the loan, deducted or serviced
Completion timescale
5 days – 3 weeks
Criteria
Commercial, semi-commercial property or land acceptable
Available to individuals, partnerships, LLPs, Ltd companies, offshore companies, foreign nationals and pension funds
Minimum applicant age 18 years – no maximum age
Available in England, Scotland, Wales and Northern Ireland
Adverse credit accepted (on a case by case basis)
Loans from £25,000 with no upper limit
What is a commercial bridging loan?
Commercial bridging loans are, as their name suggests, bridging loans which are secured against commercial property. They are used to secure funds quickly to fund commercial property purchases or release funds from commercial property.
They are short-term, interest only loans which are usually arranged for up to 18 months (although some lenders offer longer terms).
During the term of the loan, interest is usually rolled into the loan and repaid at the end of term, or sooner if the loan is repaid early.
As such, there are usually no monthly payments to make. This is similar to the way interest is handled using a residential bridging loan or development finance.
What property types can a commercial bridging loan be used for?
Our commercial bridging loan products are often used to fund:
- Offices, such as professional practices
- Pubs, bars, and restaurants
- Hotels, guest houses and B&Bs
- Retail units and business parks
- Warehouses, factories and industrial units
- Large HMOs/unusual residential investments
- Mixed use property
- Care homes
- Places of worship
- Garage blocks, car parks and land
How much can I borrow?
We can offer commercial bridging finance from £10,000 with no maximum loan size.
Your maximum loan with be determined based on your property value, your chosen lenders maximum loan to value (LTV), the property type and how much you can afford to repay using your chosen exit strategy.
In most cases, the maximum LTV for commercial properties is 75%.
Unlike residential loans, such as regulated bridging loans and unregulated bridging loans, lenders will increase or decrease their maximum LTV depending on the security property offered.
For example, a high quality office space in an area of high demand will be able to achieve a higher LTV than a tertiary warehouse that is surrounded by vacant warehouse space.
If you’d like to know how much you can borrow based on your property, get in touch today and our team of experts will be able to tell you very quickly.
How much does a commercial bridging loan cost?
Commercial bridging costs between £550 and £850 per month per £100,000 borrowed. This gives you an interest rate of 0.55% to 0.85% per month, which is realistic for most loans.
In most cases, the interest can be added to the loan and repaid when the loan balance is repaid.
On top of the interest charged, there are also a few fees to consider. They are:
Lender arrangement fee – These fees are charged by the lender and can usually be added to the loan. Typically, you can expect this fee to be 1-2% of the loan amount.
Lender exit fee – Thankfully, these fees are becoming less common, but some lenders charge an exit fee when the loan is repaid. Where this is the case, it is usually equal to 1 month’s interest costs.
Broker fees – Most brokers charge a fee for arranging a commercial bridging loan, often 1-1.5% of the loan amount. At ABC Finance, in most cases we charge no broker fees.
Valuation fee – This fee is payable to a chartered surveyor and is used to assess the security property. It is paid early in the application process and the cost depends on the property value, type and location.
Legal fees – You’re usually expected to pay both your own and the lenders legal costs. This fee is usually payable in two parts. The first prior to legal work beginning, and the balance on completion. If you’re looking to secure a better deal on your loan, consider reducing your loan to value, or offer additional security over another property. In most cases, doing either will reduce the interest rate charged.
How long does commercial bridging finance take?
Commercial bridging finance takes around 2-3 weeks to arrange, ideal for auction purchases.
The key to completing your finance application quickly is to instruct the valuation and begin the legal process at the outset.
Doing so will save a lot of time as these are the areas that tend to slow down completion.
Also, it’s worth noting that your choice of solicitor is key to securing funds quickly. Make sure you choose a solicitor that is highly experienced in bridging and has a full understanding of your timescales.
If you’re not entirely satisfied with your solicitor then we can recommend a bridging specialist who will make sure your timescales are met.
Will I qualify for bridging finance for my commercial property?
Yes, if you can offer suitable security, meet the lenders LTV requirements and have a strong exit strategy, then you stand a great chance of qualifying.
We work with the leading lenders from across the market, so can support most borrowers in their finance needs.
If you’re unsure whether you will qualify, get in touch and we will be able to advise you on your chances of approval almost immediately.
What information will I need to provide when applying for a commercial bridging loan?
When looking to apply, you will usually be asked for the following information:
- Details about yourself
- Details about the property
- What your exit strategy is (and proof that it is viable, where appropriate)
- A summary of your loan requirements
Frequently Asked Questions
Are all commercial bridging offers non-regulated?
For commercial property, every loan is unregulated. This is because if there are no living quarters, you are unable to reside at the property.
For semi-commercial property, your loan may be FCA regulated if you live in 40% or more of the total internal area and are borrowing in your personal name.
Can I pay the interest monthly?
Yes, where affordable, it’s fine to pay the interest monthly rather than adding it to the loan. If you opt for serviced interest, proof of income will usually be required to prove affordability.
This could be in the form of payslips, tax returns or bank statements.
Why are interest rates higher than those for residential property?
Lenders price applications based on the perceived risk presented to them. As commercial property tends to be less liquid than residential, the rates charged are higher on commercial bridging finance.
For higher quality, in demand properties, you’re likely to secure the best bridging finance interest rates.
