Author: Gary Hemming CeMAP CeFA CeRGI CSP
20+ years experience in bridging loans
Key Features
Max LTV
Up to 85%
Interest rate
From 0.49% 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
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)
What is large bridging finance?
Large bridging loans are loans of £1m or more that are secured against property or land in the UK. They are often secured on high value assets and large bridging loans in London are particularly common due to the higher value of properties in the area.
Acceptable security properties include:
- Residential property
- Luxury or single unit ‘trophy’ properties
- Commercial property
- Semi-commercial (also known as mixed use)
- Land
- New build property (often to repay a development finance facility)
- Property portfolios
In the UK bridging loans can be used to purchase or refinance property for almost any purpose and are to ‘bridge the gap’ between 2 events happening such as the purchase of a property and another property being sold.
How do large bridging loans work?
The principle is similar to a standard mortgage, in that it is a loan secured against a property, but with a few key differences.
Firstly, the duration of a bridging loan is much shorter, usually from 1-18 months for unregulated bridging loans. FCA regulated bridging loans are capped to a maximum loan term of 12 months.
The second key difference is that in most cases the interest charged is added to the loan, leaving you with no monthly repayment to make. Instead, all costs associated with your lending is repaid alongside the capital when the debt is repaid.
How to apply for a large bridging loan
When requiring a large bridging loan, the big decision is whether you choose to approach bridging loan lenders directly, or to use a reputable broker.
Most, but not every bridging lender will work directly with clients, meaning it is possible to secure funds without using a bridging loan broker. Others prefer you to work with a suitable specialist who can advise you on the matter and ensure things run smoothly.
A broker will have access to lenders from across the market and will have access to the best bridging rates, low lender fees and an understanding of the relative speed and service levels of each funder.
To apply, simply approach the lender or broker of your choice and explain exactly what you’re looking for. From there, your application will be assessed on an individual basis and a quote produced.
If you’re happy with the quote, in most cases, it is signed and returned along with a full application form and the required supporting documents.
While this is fairly straightforward, the skill comes in the processing of the application, dealing with complexities before they arise. Thinking ahead to ensure criteria are met and the soft facts are handled carefully to ensure the application is presented in the best light to get credit approval.
How much can I borrow?
We offer specialist loans for facilities over £1 million, with further offers for those borrowing over £2 million.
The amount you can borrow will depend on a number of factors, including the borrower profile and your funding requirements, the security property itself, LTV and the planned exit route.
Assessments of the borrower include looking at your individual circumstances, credit history, age, income (where relevant) and any reputation issues. They will also look at the rationale of why the loan is needed.
The Security property is judged on the property type (residential, commercial or land, any planning permission or refurbishment works planned, valuation and location. Basically, the lender will want to ensure that the property is suitable security to lend against.
If the exit route is to sell the property, the lender may restrict the LTV on higher end units as they can take longer to sell. The same goes if the exit is to refinance, the lender will need confirmation that a longer term lender is happy to lend at this level.
A whole of market broker will assess all options and offer terms to suit your needs.
How quickly can I get a bridge loan?
You can get a bridging loan in as little as a few days. That said, most high value bridging loans take 2-4 weeks to complete.
Choosing the fastest lender isn’t usually compatible with paying the lowest interest rates, so there is a balance to consider.
Where your loan must be completed quickly, we can often shave time off the application process in other ways. This comes down to choosing the right lender, surveyor and solicitor and also having the experience to package the application to run efficiently.
Will I qualify?
Yes, as long as you can offer suitable collateral and have a strong exit strategy in place, there is a good chance that you will be approved for finance.
We can arrange bridging loans for the following borrowers:
- Individuals
- Non-UK based individuals
- Partnerships
- Pension funds
- Limited companies
- Offshore companies
What documents will I have to provide when I apply?
When applying to your chosen lender, you will usually be asked to provide the following:
- Proof of ID
- Proof of address
- Details of your exit strategy
- Proof of income (if you’ll be servicing the monthly interest)
- Details of planned refurbishment works and their costs (where you’ll be undertaking development of the security property)
- Details of your existing mortgage (for second charge applications)
- A completed assets and liabilities summary
Why should I work with ABC Finance?
At ABC Finance, we’ve been arranging bridging loans since the year 2000. We are a highly experienced team and are on hand to offer guidance and help save you time and money where we can.
We don’t charge broker fees and can offer market leading deals, often with exclusive interest rates not offered to all brokers.
Are there different types?
Yes, there are different types of bridging finance, including regulated and unregulated bridging.
Each loan type is designed for a specific purpose, often with crossover between them. For example, development exit finance can cross over with bridging loans for property developers.
Commercial bridging loans are those secured against commercial real estate and are a specialist area of the market. Finally, property refurbishment finance is another common type of bridging loan in the UK. They are used for the refurbishment, renovation, extension or conversion of a property.
Frequently Asked Questions
How do high value loans differ from regular loans?
Larger loans come with a more bespoke service, as lenders tend to take a more individual approach to the risk presented.
A lender will naturally avoid the risk of a large financial loss on a single asset, which can lead some lenders to take a cautious approach to larger loans.
For this reason, it’s vital that your loan application is placed with a suitable lender to avoid the process becoming unnecessarily difficult.
It’s advisable that you work with a reputable broker who is well versed in placing larger loans and has the experience and qualifications to back this up.
What exit strategies will you accept?
Our lenders will consider any sensible and reliable exit strategy. Common ones include:
- Sale of shares
- Sale of the primary property
- Sale of other investments
- Refinance to a longer-term mortgage
- Sale of a secondary property
- Inheritance
Which locations do you offer loans in?
We offer bridging finance across the UK including England, Wales, Scotland and Northern Ireland.
We do not currently offer loans secured against property or land outside of the UK.
Will I have to make monthly payments?
No, in most cases, borrowers are not required to make monthly payments on bridge loans. Instead, the interest is either added to the loan upfront, or ‘rolled-up’ monthly. This method works well on larger loans as it eases cash-flow.
You can make monthly payments if preferred, however, on larger loans this may be unaffordable.
