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Bridging Loans For Pensioners
Fast Funding For Pensioners
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Author: Gary Hemming CeMAP CeFA CeRGI CSP
20+ years experience in bridging loans
Bridging loans for pensioners explained
What is a bridging loan?
Bridging loans, also known as bridging finance are a short-term loan which is secured against property.
How can they be used by pensioners?
Bridging loans are a versatile borrowing tool, but best serve retired people when looking to release equity from their homes or downsize.
When looking to move home before your current property has sold, a bridging loan can be used to fund any financial shortfall and can be a more manageable lending alternative to a long-term loan alternative like a mortgage.
When taken against your own home, this is a regulated bridging loan, the alternative being unregulated bridging loans.
This can be especially useful when looking to refurbish your current home before selling, to maximise the sale price.
Other main uses are:
- Providing funds to prevent a property chain break
- To pay for care fees or other fees
- Releasing funds that are needed urgently prior to a property sale
Key product features
Key features
| Max LTV | Up to 80% |
| Interest rate | From 0.45% 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
- No maximum age
- Available in England, Scotland, Wales and Northern Ireland
- Adverse credit accepted (on a case by case basis)
Pensioner bridging finance criteria
Who can apply?
We can accept applications for individuals, partnerships, and other, more complex ownership structures.
Where lending will be taken on as a family, we can accept applications with multiple applicants without issue.
Does bridging finance have a maximum age?
No, we work with lenders who take a common-sense approach to application assessment. As such, we can offer bridging loans with no maximum age.
How long can I borrow the money over?
Loans secured against your own home are restricted to a maximum term of 12 months. This is an industry wide restriction, formed in regulation.
If you’re lending against an investment property, we may be able to offer terms over 12 months.
If you’re offered a first charge bridging loan term against your own home for longer than 12 months, this would be strange and suggests that the lender may not be regulated by the FCA. This would be considered a warning sign in this situation.
Can you lend to borrowers with bad credit?
Yes, adverse credit history doesn’t usually prevent lending to pensioners. These loans are known as bad credit bridging loans.
How much can I borrow?
What are your minimum and maximum loan sizes?
We offer loans from £25,000 with no upper limit. In fact, we also have a range of specialist large bridging loans at low rates.
What is your maximum loan to value (LTV)?
We can offer loans against your own home up to 75% loan to value. Where lending is to be taken against an investment property, we can offer up to 80% LTV.
Bridging loan rates & costs for pensioners
What rate will I pay?
Our loans start at 0.45%, with rates between 0.45% and 0.65% being common.
The lowest bridging loan rates are usually reserved for applications at a lower LTV, with applications at 50% LTV and below generally getting the best rates.
Are there other costs?
Fees will differ lender to lender, but here’s a breakdown of what you can expect to pay.
Lender fee – the fee that the lender charges to set up the loan and are usually between 1-2% of the loan amount. They can usually be added to the loan. Lower fees tend to be reserved for larger loans.
Exit fee – some lenders charge a fee on repayment of the loan, where charged it’s usually an extra month’s interest. 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 its suitable security for the loan. These fees generally increase as the property value increases.
Legal fee – there is usually 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.
How to get a pensioner bridge loan
How does a broker work?
A broker’s job is to find you the best deal for your circumstances and then work with you to ensure your application completes with little fuss.
Some brokers offer the products of just a few lenders, where as others work with the whole market. We work with lenders across the whole bridging loan market and don’t charge a fee for our service.
How would my bridging finance application be 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.
FAQs
What happens if I can’t sell my property in 12 months?
If you’ve taken out a loan over a 12 month term and subsequently fail to sell the property in that time, then you do still have options.
The first step is to reach out to your lender as the end of the term approaches. They will explain their stance should your term run over by a small amount (for example, while waiting for a buyer to complete their purchase).
If you don’t have a buyer on the horizon, then you can consider rebridging loans, these are bridging loans that are designed to specifically repay another bridging loan.
Of course, we are here to support you long after the loan has completed, so we’d be here to discuss your options, talk to your lender and to lend our experience in selling the property.
Will the lender want to know how much income I have?
Generally, the answer is yes, although if it’s very low, it won’t cause any issues as repayment of your loan is not reliant on your income.
Lending decisions for bridging loans for pensioners don’t usually come down to an applicant’s income.
About the author
Gary Hemming CeMAP CeFA CeRGI CSP
20+ years experience in bridging loans
Gary is an experienced finance professional who holds CeMAP, CeFA, CeRGI and CSP qualifications. He has a well rounded background across financial services and has worked with commercial finance, bridging loans, financial advice, pensions and insurance throughout his career.
These days, Gary heads up a lot of the operations at ABC Finance, works closely with the team and leads our work to build and integrate new technology to the business.
He regularly appears in and writes for the press including local and national news, trade publications and specialist business news.