Residential Bridging Loans

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Home » Bridging Loans » Types of Bridging Loan » Residential Bridging Loans

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How does residential bridging finance work?

Residential bridging finance is a type of short-term bridging loan designed to ‘bridge’ a financial gap. They can be used as an alternative to a standard mortgage when it’s necessary to act quickly to secure or renovate a property in a short timeframe.

Applications are offered on an interest-only basis for up to 12 months, with the monthly interest usually either deducted from, or rolled up into the loan.

Bridging Loan Criteria

Below are the main criteria points to consider when taking out residential bridging finance.

1 Up to 75% Loan to Value (or 100% with additional security).
2 Interest rates from 0.48% per month.
3 Loans from £25,000 with no maximum loan size.
4 Borrow from 1 month up to 12 months.
5 Any security considered.
6 Interest can be rolled into the loan.
7 Loans with no early repayment charges available.
8 We will consider any realistic exit route.

Which residential bridging finance options are available?

Taking out a short-term bridging loan against your own home start at interest rates of 0.48% per month for loans up to 50% loan to value (LTV). As a trusted broker that works closely alongside a panel of reputable lenders, we can offer loans at 75% LTV at 0.65% per month.

We can look at residential 1st and 2nd charge lending and can consider unusual security.

Where you have failed to repay a current bridging loan, we can also consider re-bridging loans.

How much can I borrow?

We can offer residential bridging loans from £25,000 with no maximum loan size. The maximum loan is usually restricted by the LTV, with 75% LTV usually being the maximum.

This will vary from lender to lender as their loan terms differ. In our role as a broker, we can help to secure you the best deal – getting you the funding you need with a repayment plan that fits with your circumstances.

When would you take out a residential bridging loan?

There are a number of reasons to take out a residential bridging loan as opposed to a mortgage, some of the more common ones are:

  • To raise funds quickly for business or property investment opportunities
  • To extend the lease of your property before selling
  • To fund the refurbishment or extension of your home
  • To complete the purchase of a property at auction
  • To purchase a new property before your current home is sold
  • To raise the funds needed to pay your debts as they fall due, for example paying a petition for bankruptcy

The above are examples, although we can consider residential bridging loan applications for almost any situation.

Is residential bridging finance available to anybody?

Although there are certain criteria that must be met, we can consider applications for people who have bad credit. We have lenders available who are happy to ignore adverse credit subject to having a suitable exit strategy in place.

You can learn more about this in our Bridging Loans For Bad Credit guide.

Is there risk involved with residential bridging finance?

Yes, when securing borrowing against your home, there will always be risk involved. Should you fail to repay your bridging loan when due, your home may be at risk.

Failure to repay can result in repossession, which makes expert advice of vital importance when taking out residential bridging finance.

Is my income taken into account?

Your income is only taken into account if the loan is reliant on it for repayment, either through payment of the interest monthly or for your chosen repayment method.

If you plan to roll-up the interest and your chosen exit strategy is sale of the security property, your income is not usually taken into account.

What is the process involved when taking out a residential bridging loan?

This depends heavily on the type of lender chosen. Some require very little information, whereas others will ask for more.

The process begins when you either talk to an expert or use our instant comparison tool to find the most suitable terms for your circumstances. Once you’re happy with the terms offered, you would complete the application form for your chosen lender and the formal application is made.

Where a valuation is needed, this would then be undertaken, while the lender assesses the supporting information. In many cases, there will be little information required, especially where your chosen exit strategy is sale of the security property.

Should the valuation and supporting documentation be acceptable, a formal offer can be issued and the legal process can begin.

Can you offer loans without the need for a valuation?

This is a request that we get quite often. We can offer loans with no valuation, but they tend to be at higher interest rates. For applications below 65% loan to value, we may be able to offer an instant ‘automated’ valuation.

about-the-author-gary-hemming

About The Author

This content was produced by our Commercial Lending Director, Gary Hemming. Gary has over 15 years’ experience in financial services and specialises in bridging loans, commercial mortgages, development finance and business loans. He is widely respected in his field and regularly provides expert commentary for specialist trade publications, specialist business press as well as local and national press.

Gary Hemming CeMAP CeFA CeRGI CSP  -  
Commercial Lending Director

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