We are experienced finance brokers with specialist expertise in arranging loans and finance. If you are looking for a Bridging Loan we are here to help.

Bridging Loans

Bridging finance is often associated with property transactions but it can be used in any circumstances where you need fast, flexible, easy access to short-term funding. It is usually used to allow a quick cash outlay before long term funding is arranged, or to bridge gaps between other funding streams, hence its name. A bridging loan is an excellent way to source cash in the short term, especially as they are lent on a non credit status basis. However, elevated rates of interest mean they are not cost effective long term.

We can source a wide range of bridging funding. Offers of finance can be made in as little as 24 hours and in some instances payment can reach your account in as little as 48 hours. However, typically, you should allow 7-14 days to get the best deal.

Bridging Solutions

There are, essentially, 2 tiers of bridging loan which are discussed below. We will find and recommend the option most suitable to your situation or a combination, depending on your circumstances.

Finance for Property Development

The reason bridging loans tend to be used for property is because they are so emminently suitable; they are flexible, quick to arrange and it is easier to qualify for a bridging loan than many forms of long term finance. This means we can arrange finance where no accounts are available, in poor credit history situations, where your property is unmortgageable or where you need funds to buy a property at auction.

Bridging loans can be used to cover almost any aspect of property purchase, management or development on almost any type of premises and arranging them with us, anywhere in the world, is simple and straightforward.

Short-Term, Asset-Based Finance

Another area where bridging can be useful is to cover high initial repayments on long term borrowing, so long as these repayment levels are set to drop before the short term loan matures. You can also use them to fund short term investments. This kind of interim financing should be arranged well in advance, where possible, to ensure funds will be available precisely when you need them. Bridging finance can also help ease cash flow difficulties caused by unexpected bills such as emergency repairs or VAT.

Lending Criteria for Bridging Loans

A bridging loan should achieve 80% loan to valuation, although this can rise to 100% if you have additional security or are buying your property for less than its market value. Interest payments can be deferred to the end of the loan unless it exceeds the lenders loan to value criteria.

Expect to pay a one off facility fee, interest rates 1% to 2% per month and remember that if you pay your loan off early exit fees may be charged.

If you take out a second bridging loan before the first has matured loan to value rates will be lower and costs higher.

Bridging Loan Options

• Bridging loans against purchase price usually cost the least.
• Bridging loans against open market value allow higher loan to value borrowing.
• Mezzanine bridging loans – that is, those above normal loan to value ratios – are possible for property developers.

In the same way that it is more cost efficient to buy goods in bulk, a larger bridging loan is more cost effective than a small one.

Advantages and Disadvantages of a Bridging Loan

Advantages

• Flexible terms, from 1 month upwards.
• Speed; loans can be arranged within 7-14 days or in as little as 24 hours.
• Early Repayment possible without penalty.
• 100% funding possible with some lenders where their Loan To Value criteria is based upon Open Market Value and not purchase price.
• Additional security can be used for higher loan to value requirements.
• Previous credit problems are not usually a factor in the decision making process.
  Interest can be rolled up to the end of term.

Disadvantages

• Interest rates are higher than for normal loans.
• Watch out for Early Repayment Penalties.
• Lenders Open Market Valuations can be based upon 90-180 day resale values.