Bridging Loans For Pensioners

Retirement bridging loan interest rates & costs

What interest rate will I pay?

Bridging loan rates start at 0.55% per month and go up to 2% per month. In most cases 0.55% – 0.9% per month are realistic.

The interest will be determined by looking at the LTV, your credit profile and whether the loan is a 1^st charge or 2^nd charge.

As a whole of market FCA regulated bridging loan broker, we’ll assess your situation and offer you the lowest interest rate available for your circumstances.

Are there other set up costs to consider?

Yes, the other costs to be considered are:

• Lender arrangement fee – the fee that the lender charges to set up the loan and are usually between 1-2% of the loan amount. This fee is usually added to the loan. Lower arrangement fees tend to be reserved for larger loans.
• Loan exit fee – some lenders charge a fee on repayment of the loan, if charged, it’s usually an extra month’s interest or 1% of the gross loan. We always look to use a lender who won’t charge an exit fee, where possible.
• Valuation fee – some lenders require a valuation of the property. This is to ensure it is suitable security for the loan and that the lender is protected. These fees generally increase as the property value increases.
• Legal fee – there is a fee to pay for the legal work involved in setting up the loan. You are usually expected to pay the lenders legal costs, as well as your own.
• Broker fee – some bridging loan brokers charge broker fees for arranging bridging loans. This may be a flat fee or a percentage of the loan amount. Where charged, it is usually payable on completion. We don’t charge broker fees for arranging bridging loans.

Are there any upfront costs to pay?

No, we do not charge upfront fees prior to making an application on your behalf.

In some instances, there are costs to pay during the application process. Valuation and legal fees may be payable before completion of the loan.

Some lenders offer a free automated valuation and add legal fees to the loan, negating the need to pay anything until the loan is complete.

If you require a product with no upfront costs, please let us know at the outset. This may be possible however you may pay a higher interest rate on your borrowing, so balancing your preferences is key to finding you the perfect product.

Do ABC Finance charge fees for arranging bridging finance for pensioners?

No, we don’t charge fees for arranging bridging loans of £100,000 or above.

How to get a bridging loan

What is the application process?

• You can speak to lenders directly, or speak with a broker that knows the bridging loan market to run through your needs.
• When a lender, and product is selected, your application form and supporting documents are submitted.
• The lenders underwriter will review your application and if happy to proceed, will instruct the valuation or run an automated valuation (AVM).
• When the valuation report is back, if the details are satisfactory the offer will be issued and legals instructed.
• Both yours, and the lenders solicitor will work towards a completion date.

You can instruct valuations and solicitors before underwriter assessment. This will speed up the process but is at your cost should the underwriter decline your application.

Should I work with a broker or go to a lender direct?

Working with an experienced FCA regulated bridging loan broker is beneficial, especially if they are fee free. This is because they have years of experience in the property finance market and will know exactly where to turn, which saves you time.

A broker will also assist with your bridging loan application and liaise with the lender, valuer and solicitors for you.

You can source a lender yourself and many lenders do work directly with the public, however speaking with various lenders can be time consuming.

What documents will I have to provide?

To apply for a bridging loan, brokers, and lenders alike require the following documents:

• Application form including loan synopsis and loan repayment plan.
• Proof of ID, i.e. Passport copy.
• Proof of residency, i.e. a recent utility bill.
• Latest 3 months bank statements.

How long does the application process take to complete?

The loan application process can take from 3 days to 4 weeks.

The completion time from application to funds released depends on several factors such as whether a fresh valuation is needed and how far into the legal process you are.

Some lenders are of course faster than others, if urgency is key, you should make us aware of this upfront.

How is my application assessed?

Unlike mortgages, your income and credit history are not the most important factors when assessing a bridging finance application.

The key factor in underwriting a bridging finance application is your method of repaying the loan.

This is known as your ‘exit strategy’. As such, we may be able to lend, even if you have minimal income.

Lenders assess each application on its own merits and as long as you have a reliable exit in place, there is a good chance that we will be able to help.

Types of bridging loans for pensioners

First charge bridging loans

A first charge bridging loan is secured on a first charge basis and will offer the lowest interest rates.

Second charge bridging loans

Second charge bridging loans sit behind your current lender on a second charge basis. Due to the increased level of risk, interest rates are usually higher when compared to first charge bridging.

Frequently asked questions

Is bridging finance risky for pensioners?

Much like a standard residential mortgage, the only real risk here is being unable to pay back the loan. This is assessed upfront by your lender or broker to ensure that the likelihood of this is minimal.

What if I’m unable to repay the loan within 12 months?

If from the outset it is likely that you will not be able to repay the loan within 12 months, it’s unlikely that a lender will offer you a loan.

If however, you are almost 12 months into the term and your planned repayment route hasn’t happened, communication is key. Speak with your lender or broker to discuss options, the main 2 options being extending the loan to buy more time or to refinance to a new lender, often called a re-bridge.

The main reason for this situation arising is a property sale falling through.

What are the alternatives to bridging finance for pensioners?

Finance-wise, you could look to take out an equity release or retirement interest only mortgage (RIO).

Another alternative is to sell your property and downsize to free up cash.

Can I repay my loan early?

Yes, you can repay your loan at any point during the term. There may be a minimum interest payable period, this is usually the first full months interest, although some lenders do charge for 3 months.

Do I need to provide proof of income?

Yes, income proof is usually needed for this type of loan, however if this isn’t possible you are still eligible.

If you have no proof of income, let your lender or broker know upfront.

What is the minimum deposit?

The minimum deposit needed, or equity in the property for regulated bridging loans is 25% plus any fees and interest.

For non-regulated purchases, the deposit needed is 15% plus fees and interest.

Are these loans hard to get?

No, not at all!

The application process may seem daunting however our experienced advisors are on hand to help throughout the process right through to completion, and beyond.

How do you pay back the loan?

The bridging loan can be paid back by either sale or refinance of your property.

However other repayment options are available, such as inheritance, cashing in shares or pensions or sale of other assets.

Is there an age limit?

Most lenders hold an age limit of 85 years old for applicants, however as a broker we have lenders available with no maximum age limit.

Can ABC Finance help me find the best deal?

Yes, our experienced bridging finance advisors will look at your needs and preferences and offer you the best deal based on this.
Why work with ABC Finance?

ABC Finance Ltd were founded in the year 2000 and have a wealth of knowledge in the finance market.

As an FCA regulated brokerage, we always put our customers’ needs first and are honest and transparent.  

Is this type of finance regulated in the UK?

If the loan is secured against your home or a property you plan to live in, the loan is regulated by the Financial Conduct Authority (FCA). The exception is if the loan is arranged as a second charge to be used for business purposes.

If the loan is a second charge for business purposes or secured against an investment property, the loan is non-regulated, in the same way as a standard buy to let mortgage.

How can I calculate my expected costs?

Calculating your bridging finance costs can be simple, especially when using a reputable broker. Here at ABC Finance we will calculate the total costs for you.

The gross loan is the total amount borrowed, including fees and interest for the term of the loan. The net loan is the amount after costs, available to you. The difference between the gross loan and the net loan is how much the loan will cost over the pre-agreed term.

The only things to add are the valuation fees or other fees that are not to be added to the loan.

If the interest is to be paid monthly rather than added to the loan, this must be taken into account. If you borrow £100,000 at 0.7%, the interest is £700 per month.

To calculate your expected bridging loan costs, you can use our bridging loan calculator.