What Can We Offer?
Recieve an offer within 24 hours
All property types are considered
Enjoy Competitive interest rates
No minimum or maximum loan amounts
Use Bridging Finance for UK or International Property
Borrower: Ltd Co, Individuals, Partnerships, LLP’s, Trusts
Property: Commercial, Residential, School, Hotel, Restaurant, Leisure or Care homes
Loan Size: £50,000 - £20,000,000
Loan period: Maximum 2 years
LTV (Loan to Value): at the origination of the cost of the purchase maximum 75% for residential, 65% for other eligible properties
Non-refundable Interest paid upfront for the whole loan term or serviced interest options available
Applicable reference rate: BOE base rate called “BOE” or any other reference rate decided by the bank.
Arrangement fees to Bank: 1.5% and indicative interest rate: 6.40% per annum + Bank Discount Rate of 0.10%
Exit strategy- Refinance with a BTL loan or sell the property.
In case of refurbishment, the contractor warranty for the works performed and the contractor indemnity insurance is required
You can have a bridging loan put in place within a month or even sooner.
The Following Topics Are Covered
Author- Aakash Nagrani CeMAP CeRER
What Is A Bridging Loan?
Short-term funding secured against assets such as property, either residential or commercial. In the past, bridging loans were used for chain break or buying properties at auctions.
This has now expanded to other areas such as property development, light refurbishments, and land acquisitions.
We have access to lenders who do a bridge, refurbishment, and buy to let all combined as one product. Our rates for such a product are the most competitive in the UK market.
Where A Bridging Loan is Appropriate
Where Bridging Finance is required to enable the transaction to complete speedily.
Often where speed is essential, or the property may be unmortgageable. We can help until the bank's mortgage is ready.
How Does A Bridge Loan Work?
You need a deposit
The minimum deposit typically needed is about 20-25%.
Interest Rates are High
Due to Bridging loans being short-term and at times secured against riskier properties, lenders will charge higher interest rates, starting from about 0.39% per month.
They're Short term
Loans typically range with a minimum period of 3 months and can go up to 24 months.
You'll need Evidence of a Repayment Vehicle
The lender will require that you give evidence of the repayment vehicle/exit strategy. i.e how are you going to repay the loan at the end of the term? For example, selling the property or refinance onto a new product i.e a buy-to-let mortgage.
There are no monthly payments
Most bridging lenders allow for the loan to have the interest retained in the loan itself. This means you won't have to make any monthly payments due to the loan plus payments are paid off in your exit strategy. It's important to note that the interest payments that roll up will have interest charged on them alongside the main borrowing. You can also opt to make monthly payments if you wish to keep the balance from increasing.
There are costs to consider
You'll need to pay for a valuation fee, an arrangement fee which is typically 1-2% of the loan amount and solicitors fees.
This article is intended to provide a general understanding of the topic. The contents should not be treated as advice.
Different Types of Bridging Loans
What Fees Can I Expect When Taking Out A Bridging Loan?
In addition to the interest payments, there are a number of fees that must be paid when setting up a new loan. The main costs can be broken using our bridging loan calculator
Disadvantages Of Bridging Loan Finance
When compared to more traditional loans such as a mortgage, bridging loans are more expensive. as it can solve specific problems for example spotting an opportunity at an auction or generating liquidity quickly to fund a development project. Generally, this form of finance is used when others are limited, therefore this comes at a premium.
There is generally a higher risk to the lender as the approval is a lot quicker. Despite the price being a big factor when considering a bridge loan, it can be the most flexible option to suit your current circumstances.
When assessing borrowers, lenders will first try to understand your plans for repaying and exiting the loan Repayment can come in many forms, for example, you may be in the process of selling a property which will create higher positive liquidity.
Generally, the lender is more concerned with how certain and what specific date you will be able to recieve funds to pay back the loan. Once this has been established, it is far easier to secure finance.
As with any form of finance secured against property, if you don't keep up with repayments you will stand to lose your property. Having a secure repayment plan in place and evidence that the loan will be paid back is essential.
Bridging typically comes with higher fees. We cover these in the above video, Fees include valuation fees, lender fees, arrangement fees, and other costs. Accelerated Finance will be able to provide you with a breakdown of what your total costs will be if you decide to take out a bridging loan.
Advantages Of Bridging Loan Finance
Applying for a traditional investment mortgage can sometimes take weeks or months to complete. Lenders go through a rigorous process of onboarding you and making sure all documentation is in order to meet the correct regulatory rules in order to be able to lend.
Bridging lenders will meet the same requirements as a high street lender and will make sure AML, credit and compliance are followed correctly but follow a much faster process in completing the mortgage. This is due to lenders primarily focusing on your exit and the asset. As long as you are creditworthy and can demonstrate you have a solid action plan for paying back the loan, bridging can be a less burdensome type of finance to arrange.
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In most cases, bridging lenders are smaller and specialised compared to mainstream lenders. This allows for quicker decisions. Accelerated Finance has personal and close relationships with bridging loan providers. Have a look at a few of the lenders we work with.
A significant amount of bridging lenders are non-bank lenders who are responsible of deciding their own rates and arrangement fees. This means that these lenders are less influenced by changes in the Bank of England base rate.
In situations where a borrower has taken a variable rate, generally the Central Bank increase is passed onto the borrower almost immediately. Bridging lenders are different in that they fix the rate upfront.