Fast Bridging Loans
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Bridging loans are a flexible form of funding for significant purchases such as buying property, expensive equipment or land. They can be arranged quickly and support a range of purposes. This type of funding is growing in popularity and is used by residential homeowners and commercial investors alike for situations where a mortgage isn’t possible or can’t be arranged in time.
As a short-term form of funding a bridging loan has an average repayment term of 12 months, although this can extend to 36 months.
What is a bridging loan?
A bridging loan is not a mortgage, although it is secured against property, and can help provide finance when you are buying a home, commercial premises or land. It is a short term product that originated in the residential property market in the 1960s. The loans were a niche product to ‘bridge’ the gap between selling one property and buying another.
The bridging loan market has been growing rapidly over recent years and bridging finance is popular with investors and property developers. A fast bridging loan can help in a variety of situations, such as buying a property at auction when the full purchase price must be settled within a month.
Interest rates are applied on a monthly basis, in most cases, and paid back at the end of the loan term.
How much can I borrow with a bridging loan?
The amount you can borrow with a bridging loan varies and depends on the equity, or value, of your property, minus any outstanding mortgages or loans you have secured against it.
The majority of lenders will loan up to 75% of the property’s value, also known as Loan To Value (LTV.) Loans up to 75% LTV are regulated by the Financial Conduct Authority, however, unregulated loans beyond this figure are possible up to 85% LTV.
In some circumstances a 100% loan will be possible, however, this is rare and usually for commercial properties where other assets are used in addition to property to secure the loan. Preferential bridging loan rates will usually apply to loans at under 50% LTV.
As bridging loans are used as a fast form of finance in a wide range of scenarios from renovations to significant commercial developments they can range from £10,000 to £250,000,000.
Use our bridging loan calculator to work out your LTV and see how much you could borrow.
How quickly can I get a bridging loan?
A fast bridging loan is possible and it is one of the key reasons many people opt for this type of finance.
Bridging loans can be arranged relatively quickly, ordinarily within 5-21 days, however, if you are looking for fast funding then get in touch as ABC Finance can work with our wide panel of lenders and get a funding decision in hours. Bridging loans can be made available in a matter of days in some cases.
You can read the ABC Finance guide to bridging loan timescales for further information on how long the application process takes.
Fast bridging loan timescales:
Loan
Timescale
Up to £300k
3 Days
Up to £750k
7 Days
More than £750k
3 Weeks
Fast bridging loans by ABC Finance
Our aim is to save you time and provide a bespoke service that suits your unique circumstances. The speed at which your bridging loan is arranged depends very much on the lender you choose and this is where we can help; ABC Finance specialises in fast bridging finance matching you to the right lender from our wide panel.
ABC Finance has deep experience in bridging finance and our friendly experts can guide you through the process, including paperwork requirements, supporting you to ensure a quick turnaround.
Fast bridging loans from ABC Finance
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Fast bridging finance solutions with written terms in 2 hours and funding within 72 hours
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Friendly specialist team to guide you through the process
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Loan from £10k to £2m for residential and commercial purposes.
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Rates from as low as 0.43%
Key Features
Max LTV
Up to 85%
Interest rate
From 0.47% per month
Charge types
1st, 2nd & 3rd considered
Term
1-36 months (maximum 12 months for regulated bridging loans)
Interest type
Added to the loan, deducted or serviced
Completion timescale
5 days – 3 weeks
What paperwork do I need to get a bridging loan?
To apply for a bridging loan you will need to be 18 or over and a UK resident. You will also need to provide proof of income, bridging loan lenders in England commonly accept:
- Payslips
- Bank statements
- Tax returns
- Property income (demonstrated through bank statements)
You will need to provide detailed information about the property you intend to use as security, or a clear business plan for land or property development.
Financial history is less of a concern to lenders as compared to a mortgage in England as interest is, in most cases, paid at the end of the loan period and secured on a property.
What can I do to speed up the process?
If you need an urgent bridging loan it is advisable to work with a specialist bridging loans broker, this is because applying to lenders individually is a time-consuming process and repeat applications are not helpful for your credit file.
A broker will advise on what documentation is needed, from the list above, and match you with lenders that suit your circumstances; for example, if you have adverse credit or require a particularly significant amount of funding. It is essential that you are upfront with your broker, or lender if you apply directly, about your circumstances so they can find a solution that works for you from the outset.
The best rates for bridging loans apply for 50%, or lower, LTV and also cases where more compliance checks are undertaken.
If you are looking for a fast bridging loan it’s likely you will have to forego some of the optional stages in the loans process, such as undertaking surveys. This will increase the risk to the lender and so rates are likely to be slightly higher for a speedy turnaround.
If you chose to use a solicitor, and in some cases this will be a requirement, make sure to use a solicitor with experience in the bridging loans sector to streamline the process.
How does a bridging loan work?
Bridging loans are a straightforward way to raise significant funds in a short time-frame compared to mortgages and other options. They are not designed to be used over the longer term, however are a great option when fast funding is required to seal a deal or prevent a sale falling through.
Bridging loans for residential property and homebuyers in England
An example of how a residential bridging loan would work:
- You want to buy a house for £600,000 and you need to put down a £200,000 deposit and borrow the rest on a mortgage.
- Your house hasn’t sold yet and you only have £50,000 in savings.
- You ‘bridge’ the gap and get a bridging loan for £150,000 to cover the deposit until you sell your house.
- When your house sells you pay off the bridging loan with interest (accrued on a monthly basis and payable at the point of loan exit.)
What can I use a bridging loan for?
Property investment is the most common reason for taking out bridging loans. This is true whether you’re financing an investment property, a buy-to-let property, or your own home.
This is because a bridging loan allows you to secure a property quickly, access funds efficiently, and add value through property refurbishment where it is needed, all while bridging the gap between the refinance to new mortgages or a property sale.
Bridging loans can also be used for the following reasons:
- To fund a property purchase or refinance quickly.
- Buying property at auction.
- To finance an uninhabitable property.
- To purchase an unmortgageable property.
- Buying a property before selling your existing property.
- To fund a business venture or tax bill.
- To buy a below market value property without putting down a deposit.
- To fund a property refurbishment.
- To buy a property or land while undertaking an application for planning permission.
- To repay your existing mortgage while selling your property.
Criteria
Residential, 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)
We assess all bridging loans on an individual basis
What are the advantages of bridging loans?
The advantages of a bridging loan are:
Speed
They can be arranged very quickly; you can get a bridging loan in 5 days-2 weeks. Some even complete on the day of application, far faster than most alternatives to bridging loans.
The costs are falling
The bridge loan market is currently in a price war. Rates realistically start from 0.47%, with 0.43% available for select applications. The main drawback has historically been cost, although this is now becoming an advantage.
Flexibility
A bridging loan is far more flexible than mortgages and secured property loans.
No monthly payments
Where your bridging finance interest is rolled up or deducted, there are no monthly payments to make. This can be a major help to cash flow during a property refurbishment or marketing period.
A Bridging loan allows lending against unmortgageable properties
Bridging loans can be used to buy a property that you would otherwise be unable to borrow against.
How much does a fast bridging loan cost (including interest rates and any set-up fee)?
The average cost of a bridging loan is between 5.64-12.2% per annum. The difference in cost is decided by the loan to value, the applicant’s credit history, property type and your plans for the property.
The strongest bridging loan applications will benefit from the lowest costs.
These are applications below 50% LTV with a clear credit history that are secured against residential property.
While bridge loans cost more than a traditional mortgage, which are around 3-5% per annum, they also offer you more opportunities to profit from property.
This can be through grabbing a bargain by completing quickly or adding value through property development or refurbishment.
Can I get a quick bridging loan if I have a bad credit history?
Yes, a bridging loan is generally available for borrowers who have bad credit. This can include defaults, CCJs, mortgage arrears, IVAs, debt management plans and even previous bankruptcy.
As a bridging loan is secured on property a lender will be more interested in the value of the property used as collateral and the exit strategy to repay the loan.
How do I compare bridging loans to each other?
To compare bridging loans with each other you should consider the total cost of each product, rather than just the interest rate.
This allows you to ensure that you’re getting the best bridging loan deal, rather than being taken in by a low headline fixed interest rate.
Other key factors to compare between different bridging loans are the following:
- Maximum LTV
- Set-up costs and exit fees
- The lender’s application process
- Whether the product has a fixed or variable monthly interest rate
- How quickly the lender can complete your bridging loan application
- Late payment fees, default interest charges and extension fees
- The type of security that the lender requires
- The reputation of the lender
Frequently Asked Questions
A good broker will help you to find the best deal on your bridge and can save you a lot of money.
Even the big money comparison sites such as MoneySuperMarket, GoCompare and Moneyfacts pass on enquiries for this type of funding to brokers, such is their importance to the market.
Experience is key when applying for bridging loans
When you’re looking to raise funding on a residential property, commercial property or even land, most lenders will consider various exit strategies (how you plan to pay back the loan).
Common bridging loan exit strategies include:
• Sale of the primary property
• Sale of other investments
• Refinance your bridging loan to a longer-term mortgage
• Sale of a secondary property
• Inheritance
• Sale of shares
Yes, a bridging loan is a replacement for a mortgage in the short term. It is a form of alternative form of funding that is used when a mortgage wouldn’t be available, however, you need to borrow money against a property.
This can be because the property isn’t mortgageable , you need the funds to purchase a new property quickly or you have a short-term financial gap that needs to be filled, for example using a bridging loan for a house purchase before your existing home sells.
You will need a minimum of 25% equity in your property, unless you offer the bridging lender additional security over another property, whether residential or commercial.
Loan to value is a key metric when assessing bridging loans and for this reason, deposit, or equity in the security property is key.
No, your chosen exit route is more important than your income when it comes to bridging loans, especially when interest is being added to the loan.
This is where bridging loans are different to other types of borrowing such as mortgages, credit cards, overdrafts or secured loans.
Yes, bridging loans are often taken by retired borrowers who are looking to downsize while waiting to sell their old home, especially where speed and cash flow is important.
Yes, we can offer a bridging loan to self-employed borrowers. Applications from self-employed consumers are common and offered by most lenders.
Yes, many lenders offer a bridging loan on land, although it will be much simpler if planning permission is in place. Some peer-to-peer lenders are stronger in this area.
We work with lenders from across the market to ensure we can offer the greatest access to funding methods for a wide range of customers. Eligibility for our loans can be determined by talking to our team of broker experts.
Arrangement fees for bridging loans can vary depending on the bridging loan provider and the specific loan terms. These fees depend on the lending package and are typically calculated as a percentage of the bridging loan amount. Typical arrangement fees are 0.5-2% of the borrowing facility.
A decision must be made about the total cost of loan cost when financing. You could face a facility fee, drawdown fee, admin fee, repayment fees and broker fees. Here, at ABC Finance we offer a great service at low cost, many lenders charge high fees.
Always consult with your bridging loan broker or adviser to get a clear indication of the fees and how they will affect your cash flow and project finances.
Bridging loans are a key financing tool for those in a property chain, which allow applicants to access the necessary funds to complete their property purchase while waiting for the sale of their current home.
This ensures that they don’t miss out on your next house or property investment opportunity due to delays with a mortgage provider.
Bridging loan providers typically offer flexible loan terms that can be tailored to fit the specific situation of property chains, reducing risks and facilitating a smooth transaction for buyers and investors alike.
The speed and flexibility of bridging loans allows a fast, hassle-free way to repair a property chain that is at risk of failure.
Yes, bridging loans are often used by property investors and developers for auction purchases. The short duration of the application process and quick access to funds make bridging loans the ideal choice for purchasing property at auction where a fast completion time is key.
When planning to use a bridging loan for this purpose, it is crucial to have a clear exit plan in place, such as refinancing or the resale of the property, to repay the loan within the agreed term.
Consulting with a credit broker or bridging loan broker can provide valuable tips and guidance to ensure that the financing meets the requirements of your auction purchase.
Bridging loans for an auction purchase is known as auction finance.
Learn more about bridging loans
Can You Repay A Bridging Loan Early?
Three Things To Consider Before Taking Out A Bridging Loan
