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Prior to the financial crisis, the key British high street banks, including HSBC, NatWest, and Barclays, offered bridging loans to their customers.

Commercial banks would provide bridging loans for account holders seeking a financial option for the short term. Bridging loans were awarded to customers to help those customers finish a financial transaction. 

This would usually allow a buyer to keep their position in the process of a sale. Nowadays, however, mainstream lenders do not offer bridging loans.

Bridging loans are still commonly used to complete a property purchase before the other is sold. Repayment is made once the sale of the other property is sold. 

Hence the name bridging loan, as this financial product can help ‘bridge the gap’ to complete a sale. These loans can be accessed quickly, allowing people to access the money to suit completion dates quickly.

High street banks would mainly provide loans for completing a purchase, but they would be given in other circumstances that were deemed secure.

Today, this finance option can even help people buy within the auction’s tight timeframe or help people buy with poor credit. It is also much more flexible and can be taken out for over a year; the usual maximum time pre-2008 was half a year.

Find out about the history of bridging loan here

Why The High Street Banks Fell Out of Love With Bridging Loans

Before the financial crash in 2008, bridging loans were relatively unpopular, as in times of economic prosperity, there were other appealing financial options like mortgages and secured loans. 

The competitive environment meant they were easy to attain because a lot of products only required self-certification. The choice customers had was vast.

However, when the credit crunch happened, high street banks halted their services with bridging loans. Despite the economic recovery, high street banks have never restarted their bridging loan service. 

When times were tough, banks needed to concentrate their resources on what attracted the most business, and bridging loans have never been big players in the lending market. A bank’s business and the money made mostly comprise mortgages, business, personal loans, overdrafts, and insurance.

The mainstream banks’ business decision was made to stop offering bridging loans as they were a minor part of their business.

The Emergence of New Providers

Today, those looking for a bridging loan usually have to look to alternative specialist lenders to access the product. Due to their popularity, many specialist lenders are offering bridging loans. 

These lenders offer more flexible options and help with residential and commercial mortgages and buy to let, especially as lending criteria for products such as mortgages are much tighter.

The bridging finance industry has thrived, and customers have far more choice when searching for short term finance. 

Countless fledgling lenders, especially challenger banks, have emerged to offer short-term financing such as bridging loans. The growth of the competitive market has decreased interest rates and the cost of a bridging loan significantly. This has led to bridging loans becoming more popular.

There are now more than 40 lenders that provide bridging loans in the UK. They include:

• United Trust Bridging Loans
• Octopus Bridging Loans
• Greenfield Capital
• LendInvest
• OblixCapital
• Funding 365 Bridging Finance
• Masthaven Bank
• Tuscan Capital

The majority of alternative lenders offer both regulated and unregulated loans. Competition is based on company USP. While some lenders can offer up to 15m, some offer benefits such as lower interest rates.

Bridging Finance on The High Street

Despite the fact high street banks no longer offer bridging loans themselves, a few high street lenders are still involved in the bridging finance market. Those who wish to lend through established banks can.

NatWest

Natwest manages alternative lending platform Esme Loans. These loans are intended for small and medium enterprises (SME’s) and have over fifty million to UK businesses.

Lloyds Bank

Currently, Lloyds Banks provides residential bridging loans. However, they are only available to the very few. Lloyds will only approve these loans to members of the Lloyds Private Bank. Potential borrowers must also have either:

• At least 250k of savings or investments with the bank or the account as collateral
• A Lloyds TSB mortgage with at least a balance of 750k

Bank of Scotland

As a branch of Lloyds, Bank of Scotland provide bridging finance on the same restricted terms and only available to members of their private services.

HSBC

Residential bridging loans are available at HSBC for customers who have arranged the mortgage for their existing property.

Please visit related information on Halifax bridging loans and Santander bridging loans.

Bridging finance or a bridging loan iѕ оftеn uѕеd to ‘bridge thе gap’ bеtwееn buуing a рrореrtу аnd ѕеlling a previous one. Bridging finаnсе саn аlѕо be uѕеd as a ѕhоrt tеrm mеthоd of аѕѕiѕting with thе рurсhаѕе оf a рrореrtу at аuсtiоn, whiсh requires рауmеnt immеdiаtеlу.

Oрting for bridging finаnсе can bе beneficial fоr those needing tо bоrrоw money fаѕt fоr аn intеrim реriоd for a рrореrtу trаnѕасtiоn.

For more on bridging loans click here

A bridging finance lоаn will uѕuаllу lаѕt no lоngеr thаn 6-18 mоnthѕ аnd acts аѕ a саѕh injесtiоn for the реriоd in whiсh it is required.

Mаnу ѕmаll buѕinеѕѕеѕ need business finаnсing еithеr tо hеlр thеm gеt оff the ground or tо fulfil their potential. Thеrе аrе ѕеvеrаl finаnсе орtiоnѕ уоu can choose from, but thе ѕuitаbilitу оf each will dереnd uроn thе nееdѕ оf уоur buѕinеѕѕ аnd itѕ сurrеnt сirсumѕtаnсеѕ.

Whilе renewable еnеrgу invеѕtmеntѕ have seen ѕtеаdу grоwth over thе lаѕt decade, a more rарid ѕсаling-uр is nесеѕѕаrу fоr dеvеlорing countries to mееt climate аnd ѕuѕtаinаblе dеvеlорmеnt gоаlѕ.

Renewable еnеrgу рrоjесtѕ, especially in developing соuntriеѕ, face multiрlе сhаllеngеѕ from thе institutional, роliсу аnd regulatory lеvеl tо thе market and рrоjесt level, which саn hindеr the dеvеlорmеnt and uptake оf renewable еnеrgу.

Thе lаttеr inсludе lack of market trаnѕраrеnсу, lack of financing аnd experience in рrоjесt dеvеlорmеnt, аnd lack of relevant infоrmаtiоn оn rеgulаtiоnѕ, mаrkеtѕ аnd rеѕоurсе availability.

Thiѕ hаѕ lеd tо a lасk оf bаnkаblе рrоjесtѕ, mаking it difficult fоr invеѕtоrѕ to identify аttrасtivе рrоjесtѕ, аnd therefore rеduсing аvаilаblе capital for thоѕе that аrе rеаdу tо bе finаnсеd.

Bridging finаnсе саn bе оffеrеd аgаinѕt almost аnу property оr land and can be used fоr several diffеrеnt reasons. The mаin uѕеѕ аrе:

• Purсhаѕing a рrореrtу ԛuiсklу – ѕuсh аѕ аuсtiоn рurсhаѕеѕ
• Buуing uninhаbitаblе рrореrtу
• Funding property restoration оr conversion wоrk
• Rероѕѕеѕѕiоn prevention
• Buуing рrореrtу undеr mаrkеt value

Othеr than thаt, it саn bе used tо ѕесurе thе еnd mеаnѕ оf rеnеwаblе еnеrgу.

Likе buying a саr or a mаjоr аррliаnсе, rеnеwаblе еnеrgу are a ѕizаblе investment, аnd many реорlе are more соmfоrtаblе financing them аnd mаking mоnthlу рауmеntѕ rather thаn рауing with cash аѕ a lumр sum.

Those hоmеоwnеrѕ who dоn’t wаnt to рау fоr thе еntirе ѕуѕtеm uрfrоnt but аrе lооking tо оwn thеir ѕоlаr system еvеntuаllу hаvе the орtiоn of gеtting a ѕоlаr lоаn to pay fоr thеir ѕуѕtеm.

Bridging finаnсе makes it роѕѕiblе fоr homeowners who uѕuаllу ѕреnd thеir utilitу bills monthly to mаkе thоѕе payments for thеir ѕоlаr еnеrgу inѕtеаd. Whilе solar lоаnѕ present the highеѕt ROI in the lоng-tеrm of аnу ѕоlаr financing орtiоn, there аrе other ѕоlаr financing options.

Hоmеоwnеrѕ соnѕidеring this орtiоn ѕhоuld fullу educate thеmѕеlvеѕ on the рrоѕ and соnѕ оf a ѕоlаr lоаn, аnd who they аrе dеѕignеd fоr, before ѕеttling on thеir dесiѕiоn.

Thеrе аrе some specialist bridging finаnсе lоаn companies in thе mаrkеt, аnd mаnу high street lenders offer the service. Bridging finаnсе can be arranged within a mаttеr of dауѕ, аnd уоu mау be аblе tо often borrow up tо 75% оf thе рrореrtу’ѕ value.

Whеn it соmеѕ tо аgrееing tо a bridging finаnсе loan, lеndеrѕ will look at affordability. Bridging finаnсе iѕ nоt аррrоvеd based оn inсоmе multiрlеѕ, but lenders will examine thе lоаn tо vаluе ration; аnу rеvеnuе ѕtrеаm, tоgеthеr with thе proposed еxit.

Renewable еnеrgу lоаnѕ have thе same рrimаrу considerations аѕ оthеr tуреѕ оf loans:

• Lоwеr interest rаtеѕ rеѕult in lоwеr оvеrаll соѕtѕ for bоrrоwеrѕ.
• Loans with ѕhоrtеr tеrmѕ will gеnеrаllу hаvе higher mоnthlу рауmеntѕ аnd lower tоtаl costs оvеr thе lifе of thе lоаn.
• Rеnеwаblе еnеrgу lоаnѕ can bе еithеr ѕесurеd or unsecured, whiсh results in a widе array оf intеrеѕt rаtеѕ, tеrm lengths, and сrеdit requirements аmоng loan оffеringѕ.

Hоw Do Bridging Loans Wоrk For Rеnеwаblе Energy?

Rеnеwаblе еnеrgу loans likе ѕоlаr роwеr wоrk much likе other home imрrоvеmеnt lоаnѕ.

Thе lending соmраnу either рrоvidеѕ the capital fоr thе lоаn in a lump ѕum or ореnѕ uр a linе оf сrеdit thаt thе homeowner саn drаw uроn. The financier аnd hоmеоwnеr аgrее tо a specific tеrm fоr the lоаn, whiсh dеtеrminеѕ the intеrеѕt rate the homeowner will pay оn lоаn. Thе hоmеоwnеr thеn mаkеѕ mоnthlу payments towards thе lоаn thаt inсludеѕ the interest.

Kеер in mind thаt thеrе is a ѕignifiсаnt difference bеtwееn a rеnеwаblе energy lоаn аnd a rеgulаr home imрrоvеmеnt loan. A rеnеwаblе energy lоаn аllоwѕ уоu to lеvеrаgе dеbt to own аn аѕѕеt that gеnеrаtеѕ value for уоur hоmе аѕ wеll as gеnеrаting electricity tо minimizе уоur electrical рауmеntѕ.

Hоw Dоеѕ Renewable Еnеrgу Save Thе Homeowner Mоnеу?

Uѕing Sоlаr power аѕ an еxаmрlе, it саn help homeowners gеt intо solar system mоrе quiсklу and аt a reasonable соѕt.

The ѕаvingѕ thеn ѕtеm from the еnеrgу еffiсiеnсу оf the ѕоlаr system, significantly reducing оr eliminating thе hоmеоwnеrѕ’ electric bill. Thе wау it works iѕ thаt, оnсе thе solar iѕ installed, the homeowner enters a nеw rаtе ѕtruсturе with thе utilitу, аnd ѕеllѕ аnd buуѕ bасk роwеr tо аnd from the роwеr соmраnу in a рrосеѕѕ rеfеrrеd tо as “net mеtеring”.

The grеаt thing аbоut rеnеwаblе energy finаnсing iѕ thаt it аllоwѕ thе hоmеоwnеr to ѕаvе mоnеу оn thеir power bills, аnd tаkе the mоnеу thеу were paying tо the electric соmраnу every mоnth аnd use a роrtiоn of thаt payment tо pay fоr thеir ѕоlаr раnеlѕ.

Thiѕ is an excellent deal fоr thе hоmеоwnеr as it аllоwѕ thеm tо рау fоr a nеw hоmе improvement thаt аlѕо supplies thеir home with electricity, while аlѕо аllоwing them tо pocket the rest оf the money.

Thе hоmеоwnеr is also аdding tо the vаluе of thеir home bу аdding аn еnеrgу-рrоduсing appliance to it, whiсh саn rаiѕе itѕ value if thе hоmеоwnеr iѕ ever trуing tо ѕеll in thе futurе.

Thiѕ credit рrоduсing аnd redeeming process thаt rеnеwаblе energy allows fоr саn еnаblе hоmеоwnеrѕ to ѕtаrt ѕаving money in thе firѕt month оf installation.

Tурiсаllу, thе mоnthlу lоаn рауmеnt thе homeowner makes to thе finаnсiеr iѕ lеѕѕ than thеir роwеr bill wаѕ before inѕtаlling it. So whеn thе rеnеwаblе ѕуѕtеm еliminаtеѕ the роwеr bill, аnd thе homeowner оnlу has to make thеir lоаn рауmеnt, thеу аrе ѕаving on thе diffеrеnсе, even in month оnе.

Hоw Iѕ A Bridging Lоаn Саlсulаtеd?

Hоw muсh уоur bridging lоаn соѕtѕ iѕ a ѕimрlе calculation mаdе by thе bаnkѕ. Aѕ one would еxресt from thiѕ tуре оf loan, thе bridging loan costs саn bе highеr than ѕоmе оthеr conventional fоrmѕ оf finance. Bridging loan interest rаtеѕ are сhаrgеd mоnthlу, аѕ реr the nature оf thе finаnсе.

Oftеn, реорlе will fосuѕ оn trуing to find the lowest intеrеѕt rаtеѕ аnd make a decision bаѕеd on thiѕ аlоnе.

Kеер in mind that ѕоmе lenders will increase thе tоtаl соѕt by charging large еxit fееѕ, fund mаnаgеmеnt costs аnd оthеr соѕtѕ thаt mау not be initiаllу сlеаr. Please ask аbоut these bеfоrе соmmitting tо any lеndеr and kеер the tоtаl соѕt in mind when dесiding bridging lоаnѕ.

It’ѕ аlѕо imроrtаnt to ask аbоut whether thеrе are аnу broker fees inсludеd with thе dеаl.

Solar lоаnѕ аrе thе least еxреnѕivе form оf rеnеwаblе finаnсing for homeowners whо hаvе good credit scores.

Fоr thоѕе hоmеоwnеrѕ who hаvе hоmе еԛuitу, hоmе еԛuitу loans аrе the сhеареѕt types of rеnеwаblе energy lоаn аѕ thеу boast thе lowest intеrеѕt rаtеѕ, and mоѕt оf thе time the intеrеѕt раid iѕ tаx-dеduсtiblе, muсh likе mоrtgаgе interest.

Thеrе are also rеnеwаblе еnеrgу lоаnѕ thаt do not require collateral, аlthоugh they dеmаnd highеr intеrеѕt rаtеѕ. Tурiсаllу thеѕе do not require аnу mоnеу dоwn, аnd thе hоmеоwnеr may have thе option tо рау the loan оff early with no реnаltiеѕ, something thаt is nоt possible with a lеаѕе.

For more information on bridging loans for renewable energy contact Property Finance Partners.

Bridging loans are a common financial solution that is quick and short-term. 

One of the many uses of a bridging loan is to use the money to purchase a property. But along with the money borrowed, there are additional fees on top of this.

How Can A Bridging Loan Be Used To Purchase A Property?

Bridging loans for purchasing a property or residential bridging loans is an excellent way to get financial help to buy a property. 

Residential bridging is very popular. This type of loan is used because once you have got approval for it from a lender, the money is then available to you to use purposefully for purchasing a property. 

They must be used for this reason, as this has been agreed with the lender. When taking out a residential bridging loan, you need a plan for how the loan will be paid back, which will usually relate to the property.

Ways the residential loan can be used to purchase a property include:

• Purchase a property with the intent to sell it, once it has been done up.
• Purchase a property with the intent to rent it out, meaning you will receive a monthly payment.
• Used to close a sales gap in a sales chain. It may be the case that you are purchasing a new property, but moving out of your former one. In this case, there is a sale chain, and you can’t always guarantee that you will get the house that you want due to this. A residential bridging loan can be used to purchase the property you wish to move into, meaning you have secured it. This then gives you a bit of extra time to sell your house, and when it sells, the money from it can help pay the loan off.
• Buying a property to renovate or convert.

These are a few of the common ways that a bridging loan can be used to purchase a property and a great way to secure the property you want quickly.

Are Bridging Loans Expensive?

It is down to the situation and how much the applicant needs to borrow. 

Short-term loans require repayment within 12 months, so this is something to consider when looking at bridging loans. 

The great thing about a bridging loan is that it’s flexible, quick, and easy to set up and get the money. As long as you can repay the money borrowed and the additional charges on top, then it’s an excellent option for something quick and short-term. 

If you need to borrow a large amount of money, then obviously, this will be expensive to pay back in a short time. 

However, with the exit strategy that is in place when applying for the loan, this should ensure that the money can be paid back in full within the payment terms agreed.

So, yes, they can be expensive, but most of the time, the money is used to create more value and money at the other end and therefore make money to pay the loan back. 

The lender won’t offer a loan out if they think that it is too expensive and a chance that it won’t be paid back in the time agreed.

How Is A Bridging Loan Calculated?

When purchasing a residential property, a lender will use a bridging loan calculator to work out the costs, including the interest and additional fees. To work it out, they will take the following:

• Bridging loan amount needed
• Term required (the payment terms of how long the loan will take to pay back)
• Security from the borrower
• Value of the security or property
• Whether it will be monthly interest or paid back at the end of the loan

From this information, they can use a bridging loan calculator to calculate interest rates and additional fees added onto the loan.

What Additional Costs Are There When Using A Bridging Loan To Purchase A Property?

When lenders use a bridging loan calculator, not only are they working out the interest rates that will be paid on top of the loan, but they also work out what the additional fees are. 

There are standard and uncommon additional fees that may need to be paid with residential bridging loans, depending on the lender.

Common additional fees:

 Some of the more common additional fees that will be calculated using a bridging loan calculator include:

• Arrangement fees-

A fee to the lender for arranging the loan.

• Legal fees-

A lender may require a legal representative for advice and for the process, which the applicant pays for.

• Valuation fees-

This is a fee for a necessary survey of the security, which includes the security value and if it’s suitable security for the loan.

Uncommon additional fees:

 These fees will depend on the lender as some will offer them for free, rather than charging you extra money for the services. If a lender includes the additional fees, they will also work this out using a bridging loan calculator. The more uncommon fees include:

• Exit fees-

Some lenders may charge an exit fee, which is usually paid back on the loan’s repayment. Not all lenders will charge for this, but it is essentially a fee for finishing off the loan.

• Broker fees-

This is a fee to the broker for arranging the finance and loan.

• Administration/ application fees-

Some lenders may charge an upfront fee to process your application in the first place.

The typical fees will always be added onto the loan, and depending on the lender, it will depend on when the fees are due to be paid and how much they will be. 

The uncommon costs, you will find that some lenders don’t always charge for these things, so as a way to save money, you can find a lender that doesn’t add on the uncommon fees. 

All of these are calculated through a bridging loan calculator, taking into account how much will be borrowed, the security, value of the security, and payment terms.

Learn more about bridging loans and if you are looking for a lender contact Property Finance Partners on 020 3393 9277 or email: [email protected]

Bridging loans or interim finance is a great way to secure emergency funding for your property development needs to ensure unhindered completion. These are becoming increasingly popular in the real estate and property development industry, where often the developer might experience a sudden need for more funds. It’s then that one’s financial urgency can be sufficed by bridging loan for property development, as a temporary loan for short-term liquidity needs.

What is a Bridging Loan?

A bridging loan can be defined as short-term or temporary funding usually acquired for 6 to 12 months. It is used by a property developer or builder to bridge the funding gap until permanent financing is acquired. It provides immediate cash flow to meet urgent financial requirements until the project is completed. 

How Does Bridging Loans Work?

Bridging loans are quite a popular form of property financing and is acquired by both individuals and corporations. For example, it can help a homeowner to buy a new property while the old property is put on the market for sale. The homeowner can use the loan for a down payment of the new house, and once the old property is sold they can use the cash received to pay off the debt. 

What are the Different Kinds of Bridging Loans?

Bridging loans usually have a higher interest rate and categorized under open and closed:

Open Bridging Loan: An open bridging loan is when payment details such as the source and timing of the payment are somewhat unclear.

Closed Bridging Loan:  A closed bridging loan is when there is a specific exit plan with clear payment timings. There is certainty in this kind of loan and hence is preferred by both borrowers and the lenders.

When Do You Need a Bridging Loan for Property Development? 

There are various reasons why a developer might apply for a bridging loan. Given under are a few instances:

• Property Sale Chain: Sometimes the development of a property might get funded by the sale proceedings of another. Until the later materializes, one can acquire short term liquidity from lenders, to bridge the equity gap. 
• Refurbishment Financing: If a property is deemed unfit for a mortgage, bridging loans can be secured for renovation purposes by landowners and developers to raise the value of the property and then put it in the market. 
• Cash flow Emergency: It is common for an ongoing property development project to come up with urgent cash needs, due to exceeding expenses. Such immediacy can be sufficed by bridging loans or interim financing. 
• Property Auction: The ones making the winning bid at a property auction need to make a 10% down payment on spot to acquire claim of the property. The rest of the money needs to be settled in a month or less than that. Developers often use interim financing to buy property at auctions, as the arrangement can be made fast while ensuring completion of purchase within the given settlement time. 

Therefore to summarize all the points explained above, bridging loan for property development is short-term and flexible, and often a crucial financial push to take a development project one phase to the next. The best part about this kind of loan is that it is easily and quickly accessible, provided you have the right bridging loan brokers by your side.

When it comes to inheritance tax (IHT) in the UK, there are finance solutions on paying it off and bridging finance is one of the options to use. 

This article is going to talk about how to use a bridging loan to pay for inheritance tax along with explaining what they are and why you might need one to help you out.

What Is A Bridging Loan and Inheritance Tax?

You may have heard the term bridging finance before but not fully understand their uses for different situations, and inheritance tax is one of those.

Bridging Loan-

•  Bridging finance is a short-term loan that is taken out for a period of between 2 weeks to up to 18 months. This bridging finance tool helps people to put a ‘bridge’ between debt and financial solution.

Inheritance Tax-

•  Inheritance tax is a common thing that most people will come across at some point in their lives. This is the tax that is paid by a person who has inherited money or property from someone who has passed away. This may be something that comes as a shock to people, and therefore, they may not be financially prepared to pay this inheritance tax. That is where the bridging finance tool comes in to help.

How Much Is Inheritance Tax?

These figures are based off paying inheritance tax in the UK:

• The deceased estate must pay 40% on everything that is above £325,000. This is based on one person, and therefore the allowance would be double the amount for a married couple.

Inheritance tax may be something that you aren’t aware of, so when it comes to someone passing away, it might come as quite a shock to you that this needs to be paid. 

As you might not be prepared and have the money ready to pay, bridging finance is the perfect solution to help you out.

Can I Get A Bridging Loan To Pay Inheritance Tax?

Bridging finance can be used in different situations, and it acts as a great solution if you find that you may be struggling financially. 

When you have a loss of a friend or family, it can be a challenging and upsetting time anyway, so the added stress of having to think about paying the inheritance tax is something you don’t want to have to deal with.

This is where a bridging loan comes in to help you out and below explains to you the process of how you can use a bridging loan to pay inheritance tax:

• Bridging finance is a short-term loan, where you can borrow money, to pay off the tax owed.
• By using a bridging loan, you take away the extra stress of trying to find the money there and then and can instead, take out a loan that can be paid back in as little as two weeks.
• You would need to go to a bridging finance lender to explain your situation and discuss how much you require. You may need to go through an approval stage where they will ask you questions to see if you qualify for the short-term loan.
• Once approved, you will then receive the money which can be used to pay off the inheritance tax straight away.

If you find that you are struggling to find the money to pay off all the inheritance tax, then bridging finance is an excellent solution for something short-term.

How do I Use A Bridging Loan To Pay Inheritance Tax?

• You will first need to find a lender that will give you the short-term loan and discuss with them how much you need. They may need to assess you to make sure you qualify for the loan, before giving it out.
• You will need security to borrow the money, in most cases a property, but not the inherited property as you do not own it yet.
• Once you’ve been approved, you will receive the money in approximately 7-10 days.
• This money can then be used to pay off the inheritance tax straight away, so you no longer worry about paying that off.
• Then all you need to do is pay back the loan, which would’ve been agreed with the lender on how much would be paid at a time and the time scale to pay it all back.

Bridging finance is a straightforward process, you need to find the right lender that will help you out, and you’re good to go.

It is worth noting that you cannot use the inherited asset as security against the loan, as you do not own it yet.

Why Use A Bridging Loan For Inheritance Tax?

With paying inheritance tax, it may cause a bit of heated situation between families as it can affect the assets that were left to them. Bridging finance is a great and quick way to pay the tax back to avoid problems with the following:

• Retaining ownership of the family home-

It may be that it has split between multiple siblings, and in the case of a family home, one might want to move in and buy the other siblings out.

• Shares in the family business-

There may be a family business that a beneficiary might want to be involved in with the running and shares of the company.

• Need for early payment-

There may be a need that one of the beneficiaries require the money from the assets sooner and therefore, may push for them to be sold at a lower price than market value.

By paying off the inheritance tax sooner, things like this can get avoided, and it helps to take the extra stress and hassle away from the situation.

If you come into the situation that you find yourself needing to pay inheritance tax, then a bridging finance solution is an excellent option to consider. 

A loss in the family can be a challenging and emotional time to deal with anyway, without the added stress and emotions of needing to find money to pay the tax. Bridging finance is a great, quick and straightforward way to pay something off and only have a loan for a short period.

Learn more about property finance: www.propertyfinancepartners.com

When it comes to buying a property at auction, they are multiple ways of doing this and auction bridging loans is one. 

Bridging loans, which can also be known as a swing loan or caveat loan, are types of short-term loans that are usually taken out for several months. 

Features Of Auction Bridging Loans

There are some key features of bridging loans for auction which are discussed below:

• Auction finance can be pre-agreed and therefore, when the bid is won at auction, it can quickly move onto the next stage as you already have an agreement in place with the bridging lender. This is great if you want to move on with the process quickly when using an auction bridging loan.
• Auction bridging loans are unlike mortgages as they don’t require seeing employment history or business plans, which makes the whole process quicker.
• Bridging loans for auction are available between 3-18 months, and usually, you can borrow up to 70-75% loan, to the value of the property. 

Things To Ensure Before Using An Auction Bridging Loan

When it comes to bridging loans for auction and bidding on a property, there are some key things to think about to ensure you can do it.

• Make sure the finance is available to you.
• Review the auction catalogue for any terms and conditions set.
• Make sure there are no outstanding issues with the property you’re looking at purchasing.
• It’s best to check the property beforehand as normally, auction houses will need work doing to them. See if you can have a viewing of the property beforehand to check what needs doing and if it would be worth using an auction bridging loan for.
• Check if the property is profitable.
• Obtain a legal pack from the auction, which will tell you about the deeds and property information.

These are just a few things to think about before going ahead and buying a property at auction when using a bridging loan.

Apply For A Bridging Loan Today

Why Use A Bridging Loan For Auction?

Bridging loans are a quick and easy process for those you want to get a job done. There are some points below on why you should use a bridging loan for auction:

• With the loan, available from 2 weeks up to 18 months, you can use this time to get the property renovated and ready for rent or sale and have the security of the property through a bridging loan. It’s a great idea if you want to renovate a property to then rent or sell it as you have the time to do this.
• Bridging loans for auction are flexible, and therefore you’re not just set that the property must be a buy to let. With a bridging loan, you can have retail outlets, warehouses and offices that can all be financed through the loan, so it’s not always just housing properties you’re restricted to.
• The process is speedy and easy to use a bridging loan for auction as usually when the bid is won, a 10% deposit is paid on the day and then the agreed purchase price can be paid from within 28 days or even sooner. So, this is perfect for those wanting a quick turnaround and not wanting a long-term loan.
• As they are a short-term loan, you won’t be paying it back for a long time, and it can be gone quickly, depending on your finances.
• Bridging loans are at a lower interest rate due to the competitive business, so this can help to save you some extra money by paying less interest.

How To Use A Bridging Loan At Auction

When it comes to using a bridging loan at auction, there are different types available. Some things to consider before you decide which bridging loan to choose to include how much you want to borrow, what the property is worth, how long you need to borrow for and if you have a mortgage on your property.

Once, you’ve decided which loan is right for you, you then need to apply for the bridge loan;

• Decide what you need from your loan in terms of how much you need and how long you need it for.
• Have all the details about your current situation including the property value and mortgage price.
• You can choose to speak to a professional bridging loan broker or apply online; it is sometimes best to talk to someone to ensure you’re getting the right loan for your needs.
• Once you’re approved, you then need to wait for your loan money to come through which can take up to 2 weeks.

Now you’ve got your bridging loan; you can then think about using this to buy a property at auction. Before you plan to go to an auction, speak to a finance broker as they can advise your likelihood of getting finance on a property.

If you purchase at auction using a bridging loan, the bridging firm will make a formal offer for your finance, and evaluation may be required for this. This is a quick process when it comes to sorting the finance out so it shouldn’t take any longer than 7- 10 days which then gives you at least 12 months to complete renovations on the property.

It’s quite simple and straight forward when it comes to bridging loans at auction. You just need to make sure you have done your research and got advice beforehand to know what the best loan is for you and once you have applied and been approved for it, you can then go ahead and use this to buy at auction.

Bridging loans are an excellent option for those wanting a short-term loan with a quick turnaround and wanting to use it to buy a property at auction, to then be able to renovate it in a few months, to then go on to sell or rent.

Learn more about bridging loans for auctions here

Reputed lenders are here with lucrative property development loans for individuals and companies all over the UK! Any builder, real estate investor, commercial property owners or even residential property owners can approach them for easy financing solutions for their upcoming or ongoing projects.

Most of the companies offering property development finance in UK aim to assist property owners with fast cash so that they can get on with their dream project. Therefore, the rules and regulations are somewhat flexible and way better than the other financial institutions like the banks. So, there will not be any unnecessary holdups on behalf of the companies or their consultants and there is a high chance that your application will get approved within a short time.

Both flexible & time saving!

Well, flexibility is not their only trait because most development finance providers do not ask for much documentation for approval of the loans. So not just flexible, it’s also way less time consuming. This makes it easier for real estate investors to grab lucrative deals doing rounds in the market at the right time, without worrying about money.

But like everything else, you need to consider certain things before picking a loan provider for yourself. Here are the few things that you must know:

• Interest rates

The most crucial thing in case of loans is the interest rate. In most cases people tend to think that minute differences in the rates don’t matter, only to regret their decision afterwards. Even a minute difference in the interest rates can cost you a lot if you are taking a massive loan for some commercial space or huge property development projects. So, it is best to compare rates online before finalising your finance service provider. Always remember that even a few thousands of pounds can come in handy when you are starting something new.

• Quality of service

In case you are wondering, affordability doesn’t ensure quality. And without quality, there’s no point in saving any money. So what to do? You see, there are certain development finance service providers, who offer loans at extremely low-interest rates without compromising with quality.

If you search the internet properly you will find so many reputed service providers offering interest rates as low as 0.28% per month for bridging loans. So you see, affordability doesn’t mean you have to compromise with quality. All you have to do is, do some research before getting into a contract with anyone.

• Testimonials

Shortlisted the firms, but confused about making the ultimate choice? Don’t worry. It’s pretty simple. Only a look at the testimonials and you will know what you are getting into. All the top financial service providers have their business website where they post testimonials of all the clients. These testimonials will give you an insight into the type and quality of services offered by the company beforehand. If you don’t find anything negative on the website, you can also go to the third-party reviewing platforms, where you will find both positive and the negative aspects of any company. This way you will be able to make an informed choice.

If you can do a little research and consider these above-mentioned aspects before getting into any contract, then you will never face any issues with finances in any of your real estate projects! For the best rates & lucrative deals, you can visit https://www.propertyfinancepartners.com/!

There are many reasons why a borrower would go to a bridging loan lender instead of a bank.

The main reason a borrower would use a bridging loan lender is that the lenders are able to provide access to capital quickly and are willing to offer loans to people and projects considered high risk and have been turned down by conventional lenders such as banks.

In the following, we will breakdown some different reasons borrowers decide to get finance from a bridging lender.

A Borrower Wants to Buy a New Home

When money is required quickly to pay a deposit on a new home before the current home gets sold then a bridging loan will fit your needs, this is known as “bridge the gap”, You can get the money within a week if required and on a short term basis. The loan will be fast and flexible, and the interest rates can be reasonable.

A Borrower’s Home is Getting Repossessed

If the borrowers home is getting repossessed and is unable to sell it in time, then a bridging loan will help in this scenario as the finance can buy the house from the bank and then have the time needed to make the sale. Once it’s sold the money can repay the bridging loan lender. It is straightforward, and the lender will work in the time required.

The Borrower Has Some Credit Issues

Conventional lenders will want to see a good credit history in most cases and frown on lousy credit scores. On the other hand, Bridging loan lenders in most cases will overlook the credit history as long as you have enough equity in the property you want to give up as security against the loan.

One must be careful here as the lender may give a much lower LTV, and the interest may be higher than usual.

RELATED: Bridging Loans for Bad Credit

The Borrower is Self Employed

If the borrower is self-employed, he may not have a steady income, and this can be a problem for many conventional lenders. Bridging loan lenders will look at other factors such as the security against the loan and your overall income. You may not even have to pay monthly interest, instead, have the interest rolled or deferred.

The Borrower Wants to Buy a Property at an Auction

If the borrower wants to buy at auction money is needed quickly, and conventional lenders such as banks and building societies are not able to meet this demand. Typically at an auction, a 10% deposit is required immediately, and then you have 28 days t pay the rest of the finance. Bridging loans can be processed in 2 weeks, giving you plenty of time to pay the auction in time and then when long term finance is set the bridging loan can be paid off.

RELATED: Bridging Loans for Auction Properties

The Borrower Wants to Buy an Uninhabitable Property

A conventional lender will not lend on a property that has no functional bathroom or kitchen; this is where bridging loans come in, you can buy the property fix it up and then seek long term finance or a sale to repay the loan.

RELATED: Bridging Loans for Refurbishment

The Borrower Wants to Develop a Property

Property development is typically short term and as such conventional lenders do not finance short term property development. A bridging loan lender will have no problem to finance such a project as long as the developer meets specific criteria; it can be a viable solution. There is also specialised finance available such as development finance for these types of projects.

The Borrower has too Many Investment Properties

Conventional lenders may have a problem if you have too many mortgages on different properties, and this will be a block in getting another property. Bridging lenders will look at the overall picture, and as long as you have security that meets the loan, you will not have a problem in getting a bridging loan.

The Borrower Has Business and Has a Shortfall on Paying his VAT

Bridging loans are useful for businesses who need access to fast capital to pay off a VAT bill. Business loans offered by banks and other conventional lenders may not lend to pay off debts; they much prefer lending on expansion or stock. The bridging loan lender can in some cases take the businesses assets as security, and this may include warehouse, machines and industrial equipment.

The Borrower Has Been Recently Discharged From Bankruptcy

Conventional lenders frown on people who have had a bankruptcy in the past, and getting a loan from them can be next to impossible.

The bridging lender will look at the overall picture and take into consideration the security against the loan as the primary determining factor.

The Borrower Wants a Simplified Process

The borrower may want to take short term finance with a simple process and get access to money fast as in business may want to buy stock for Christmas but does not have the cash flow. The banks can take weeks to process and ask for a complicated array of documents which may be too late for the business.

For more on Bridging Loans visit here

At Property Finance Partners, we have access to whole market lenders (private money lenders). We can package your deal very quickly and efficiently, ensuring it will be a success. As opposed to conventional lenders such as the banks who say no we say yes. Contact us at 020 3393-9277 and find out what we can do for you today.

What Is Property Development? 

Property development or real estate development is when somebody takes a piece of land and develops it into a higher valued piece of land. Which includes:: 

• buying land
• building property
• renovating/extending/improving an already existing property
• converting a property from one thing to another 

RELATED: Property Development Finance Explained

Who Are Property Developers?

Property developers carry out property development intending to increase the value to the land or property. Increasing the cost of a space is one of the main goals of a property developer. However, property development can be a risky business, and without the right skills and planning, it can become a disastrous investment.

You will have a lot counting on your development; therefore, it can the most crucial part of your development is the way that you finance it. It can be an essential difference in whether your development gains a profit or not. 

Short-term finance is an option that will likely aid all developers out at some point. Bridging loans may not be the cheapest form of development finance, but when used correctly, they are fast and effective. Perfect for getting a project started, completing a plan, and can even prove valuable during a project when there is a shortfall in funding.

Let’s Get to Know Bridging Loans

Bridging loans are short-term, high-rate interest loans mainly acquired for property transactions, start a property development, pay tax bills, and invest for buy-to-let purposes. 

A bridging loan is a short-term loan that tends to last around 6 – 12 months.

A bridging loan often has a minimum term of around one to three months. After this, finance can get settled at any time without any additional charges.

RELATED: Bridging Loans

How Does A Bridging Loan Work For Property Development? 

A bridging loan is a short-term finance solution to ‘bridge’ a gap in funding. Including:

• At the beginning of a project before long term and cheaper development finance is available to you.
• At the end of a project as exit finance.
• Sometimes also required for the full development.

RELATED: Bridging Loan for Property Development

Raising Capital With A Bridging Loan 

Bridging loans can be a useful option for raising money as they can be completed quickly with a semi-simple application process. You can increase the capital with a bridging loan by:

• Getting capital from completed projects
• Releasing equity from other owned property to buy a new site or for repayment
• To gain funds from a property for either refurbishment or extension

Commercial

At the moment, all commercial bridging loans are unregulated, which means that the FCA (Financial Conduct Authority) does not supervise this area of the industry. E.g. if you’re securing a loan for an investment property, a commercial building, or for a buy-to-let it will not be regulated.

Flexible Interest

Bridging loan lenders will often offer the option to ‘roll-up’ interest into the total amount of the loan, which gets repaid at the end of the loan. Meaning that borrowing can cost more overall since you will be paying interest on interest. 

The interest is deducted from your overall loan, and therefore this reduces the total loan amount available to you. However, it does allow you to reduce your monthly outgoings and will enable you to focus your finance on paying building costs.

The interest on all regulated loans has to be ‘rolled up’ to avoid the homeowners’ homes being at risk. It is a possible option for shorter-term deals.

An unregulated loan gives you the option of paying the debt monthly or at the start, thus keeping your borrowing costs to a minimum.

Learn more on regulated and unregulated bridging loans

Short-Term Finance To Buy Land

A short-term bridging loan is likely the quickest way to get the funding you need to overcome the competition and get your project started. This gives you the time to get your planning application sorted while finding the cheapest development funding available for you. 

Short-term bridging finance can be uWayssed to buy a site that requires planning permission and funding it by finding a light development or conversion. It can also be used for quick cash while a prior development gets sold.

Planning Permission

Planning permission is an essential part of your investment, and it can add significant value to your property. The presence of planning permission makes your property less high risk and encourages lenders to involve themselves with you. If your property does not have planning permission, a bridging loan allows you to purchase the land and then apply for planning permission. You can then sell the land or choose to develop it yourself. 

How Can I Borrow Bridging Finance?

 The amount that you borrow depends on the reason you are taking out the loan. For example, lending against residential security may allow you to borrow up to 80% of the property value. 

This, of course, is taken out with a trusted lender and will have repayment terms. Lower loan to value (LTVs) will have a lower interest rate. On average, the lowest interest rates available will be around 50% to 55%. 

For property that is commercial property/land, it is possible to borrow up to 70% LTV, some properties that are considered semi-commercial have the possibility of 75% LTV.

Lenders

Many different lenders offer bridging finance. Primarily small investment funds, private companies, and high-net-worth individuals make up the bridging loan market who provide high-interest loans with the hope of making above-market returns. 

When lenders are deciding whether to lend or not, they like to know that the borrower has a good credit history. It will help to lower your rates and get a good deal with the lender. They also like to know that you have previous experience in property development so that they can trust you.

Typically, lenders look for a maximum loan to value ratio of 65% on commercial property and 80% on residential property. They will also likely want the first charge on the property that is to either be refinanced or sold. 

Private lenders are likely to seek equity in the development by exchanging cash. It may happen if you need to borrow more than the maximum loan to value ratio that is offered. 

High Street Lenders

First-time developers often look to a bank or a building society to buy a plot of land. However, mainstream banks do not tend to invest in a plot of land due to the security risk that it holds. 

Instead, you should go to a broker; they can pass your application onto a private bank or specialist land mortgage companies who are more willing to take risks. 

Most of them like to lend money to land that has planning permission approved, due to the increased security it holds. Although, some do lend when they feel secure that planning permission will be granted. They usually expect you to put down 50% of the land cost, but with some help and planning, it is possible to receive a higher loan-to-value ratio. 

Limited Companies

You can take out a bridging loan in the name of a limited company/individual.

Bridging Loans for a New Site? When you buy a site intending to get planning permission for development, a bridging loan is most likely the best suited to your needs. 

Development finance lenders tend to include a clause called a ‘mobilisation period’ into the loan. A mobilisation period is the amount of time given to the developer before building works must start. 

The time given can be as little as a month, and thus would not provide you appropriate time to get your planning permission to begin work. By not starting in time, you would be breaching your lender’s terms. 

It is also a risk because your planning application is never guaranteed to go through. Therefore, your schedule has no security, and it would be impossible and unwise to seek a development finance loan without planning permission. 

A bridging loan is a perfect option to bridge the gap between the purchase of the land and development finance.

Refinancing To A Bridging Loan

When you have completed a project, and the space is ready to be put on the market, a bridging loan can reduce your finance costs. 

Depending on the overall LTV you may be able to fund investment in new sites, allowing you to move forward into this competitive industry instead of having to wait on the money to be released from your current project.

Bridging finance lenders look favourably upon funding to repay development finance before the project gets sold on the market. It can result in you benefitting from low rates and an easy application process. However, this is only available to you if the project has been granted practical completion sign off.

Regulated Development Finance

It is possible to use regulated bridging finance if at least 40% of the building gets used as the developer’s residence. This is often used when planning permission gets granted on the land/garden of an existing property.

Development Finance 

Usually, when the cost of work exceeds 50% of the property’s value, it is considered a substantial development where development finance is likely more suitable for your development needs.

Learn more about Development Finance

Bridging Loans And Development Finance

It is important to not see a bridging loan as a replacement for development finance. 

A bridging loan should be used to ‘bridge the gap’ for property developers and investors. Development finance is used to fund property development projects by releasing funds in stages throughout the build. Releasing funds in stages works well for more significant developments, but not so much for smaller developments. 

Projects such as property refurbishment or smaller conversions are likely to work better with a bridging loan. It is due to bridging loans being much more straightforward in comparison to that of a mortgage. 

It is still possible for bridging loan lenders to release payments in stages, but it is still a much simpler process.

Bridging Loan For Refurbishing An Existing Property

Renovating an existing property is a standard route for first-time developers. It helps to develop skills and experience, which will aid you in future projects. 

If the property that you plan to develop is currently uninhabitable, or you intend to sell it once the development is complete. It won’t be eligible for long-term mortgage finance and so bridging finance of one year or 18 months should provide you with time to complete the development. 

High street lenders often shy away from refurbishment work whereas experienced mortgage advisers have specialist lender contacts who can offer bespoke refurbishment loans. Bespoke refurbishment loans are the most suitable finance for refurbishment work. 

Bridging Loan Property Type

A bridging loan can be used for almost any kind of property; it is one of the many benefits of them. You can secure a loan against a property that you already own, rather than the one you are using the loan to buy. 

Most high street lenders will not provide finance to an uninhabitable property because they are seen as high-risk projects. This is when a bridging loan can be used to cover the costs of repairs and renovations until the home becomes habitable, allowing you to take out a mortgage then or to sell the property.

Light Refurbishment Loan

Tends to be smaller, cheaper projects. You will qualify for a light refurbishment loan if; 

• There is no change to surrounding nature or the purpose of the premises (e.g. a shop into flats)
• Planning permission is not required
• The building works don’t have to follow any building regulations.

Therefore, light refurbishment loans can be used on a residential property that doesn’t need; planning permission, interior renovations, or an HMO (house of multiple occupancies) buy to let.

Heavy Refurbishment Loan

A heavy refurbishment loan involves substantial building works; e.g.:

• Change to the nature of the building/area
• Includes structural works
• Planning permission is required
• Building regulations are needed

A heavy refurbishment loan is usually the type of loan that is needed for property extensions, conversions, or significant structural works. 

Light Refurbishment Of Heavy Refurbishment? 

Whether your development is a light refurbishment or heavy refurbishment depends on the lender. The cost difference can be drastic, which is why you should seek help when finding the correct lender for you.

A Good Broker 

A good broker will be able to take your application to the lender that will view it as more favourable than other lenders. It can save you thousands on the cost of your finance. 

If your development is borderline light or borderline heavy, a lender who deals with both light and heavy finance will be your best bet to get a good deal as it can save you money in surveyor’s fees. 

If you are turned down by the lenders light refurbishment department and are then referred to the lender’s heavy refurbishment department, you will save money in repeat surveyor’s fees. 

With Covid-19 becoming less of a threat, and the reality of the property market taking a hit will result in many more opportunities to obtain cheaper properties.

Avid investors must raise money fast; one option to do so is bridging finance.

Below is a quick guide on how to get bridging loans to buy property in London. Competition for buying a property in and around London is extremely high. It means that when you eventually come across an excellent investment opportunity to purchase an ideal home, you must move fast. 

The hardest part is obtaining the right funding and quickly when buying a property in the capital of the UK.

Is it a challenge? 

In such scenarios, a bridging loan comes in handy, letting you quickly raise the funds you need to make a property purchase.

Most people are familiar with the term “bridging loans” but don’t know how they work in relation to buying a property in London. So, let’s begin.

How Bridging Loans Work To Buy A Property?

Although bridging loans (or bridging finance) work a lot like buying a property with a mortgage, there are some differences. 

Similar to a mortgage, they are generally secured against the property you want to purchase. However, they can even be secured against an additional property as well, allowing you to borrow a larger sum of money or get a better interest rate.

The key features of bridging loans:

• Short-term
• Faster, so they can be arranged within days
• No credit history required
• No income required
• Security required

How to Obtain Bridging Loans to Buy a Property in London?

How To Obtain Bridging Loans To Buy A Property In London?

The process of getting a bridging loan is truly no different from purchasing a property with a mortgage, but it should be much faster. To get bridging loans in London, you should contact private lenders, banks or dedicated subsidiaries of high street banks. 

All these options are generally accessible through specialist finance brokers.  

In comparison to mortgages, the lending norm for bridging finance is a lot more flexible and hassle-free. This means that challenges such as non-UK residency or complicated income streams will not necessarily be a trouble for you as they might be for a high street mortgage. 

Buying a house in London with a bridging loan

How To Qualify For Bridging Loans?

Qualifying for a bridging loan boils down to your exit strategy. If it is workable, that’s half the fight. From this point, you only need to worry about how to secure the best rates, and that’s done by fulfilling the eligibility requirements of as many lenders as you can. 

Obtaining the best bridging loan rates in London is possible if you can approach many lenders and compare the rates. It also helps if you are a low-risk borrower with an accomplishable exit plan for the money. 

Lastly, when looking for bridging loan lenders in London online, make sure to compare at least three to five options to find the best deal that meets your unique requirements and circumstances!

For more information, guide and advice and the best bridging options or alternatives to bridging loans, contact Property Finance Partners

Due to the short timescale process of buying a property at an auction, long-term financing options such as mortgages are impossible to place into action quick enough to buy a property.

However, there are some other options to finance your purchase, and one of them is a short-term bridging loan for an auction property. 

At an auction, you are required to pay a non-refundable deposit immediately, that’s generally around 10 percent. Completion of this transaction won’t happen until 28 days later.

Within this period, you can easily arrange an auction bridging loan. Bridging loans for auctions are available for residential properties as well as commercial. 

Book a FREE Advice Call With Our Property Expert

What are Bridging Loans and how do they work?

Why Go For Auction Bridging Loans?

There are several genuine reasons to go with auction bridging loans, so let’s discuss them:

• They can be pre-agreed, which means that you can expect a contract in principle with your bridging lender quickly. And when the bid is accomplished at an auction, you would be able to move it quickly to the next phase. 
• They aren’t always based on credit or income. Unlike mortgages, the lender will not ask for your employment history or any business plan depending on the exit strategy, making them that much faster than any other loan.
• They are available between two weeks and eighteen months. 
• You can generally borrow up to 80 percent Loan to Value of the property, which means the loan size in comparison to the property value. Keep in mind; if you were to utilise another property or asset as collateral that has equity, you might be able to borrow more or obtain lower rates or even both, which could entail you borrowing up to 100% of the cost.

About bridging loan rates

Buying a house with a bridging loan

Reasons To Consider An Auction Finance Specialist 

Working with an auction finance specialist to get bridging loans for auction properties can add a lot to your plate, so let’s discuss the perks of using an auction finance specialist:

• Personal service: You will work with a professional and experienced case manager to manage your needs from initial inquiry to completion. 
• Fast Decisions: When you work with an auction finance expert, you will get a complete guide in principle the same day as getting your inquiry. Moreover, the lenders will offer full, comprehensive terms for the specific loan. 
• Customised to you: Each loan is processed on its individual merits and can be customised for your unique requirements. Working with an auction finance specialist lender would help you meet your requirements even in today’s competitive market. 
• Fast Turnaround: Funds can usually be made accessible within 7 to 10 days, thus with a supportive solicitor, you can expect the whole process completed within a week of your first inquiry. 
• Flexible: Loans can be arranged after, during, or before the auction, which means that you get the flexibility to manage your finances when you choose, and valuations can be completed after a successful bid at auction. 

To calculate costs on a bridging loan

Even though it’s flexible with bridging loans for an auction property, it’s recommended to get the valuation of the property and finance agreed before you attend the auction. 

Why not discuss your auction requirements with Property Finance Partners. We are experts in property finance including finance for auctions.

Book a FREE Advice Call With Our Property Expert

Why Choose Property Finance Partners?

• Offer some of the lowest rates in the UK
• Offer first and second charge bridging loans at the lowest rates
• Borrow up to 80% Loan to Value
• Borrow from £20,000 to £1B and above (keeping currency units the same)
• Many structured finance facilities available
• Ability to finance up to 100% of the loan to cost for developers
• Finally a personal customer experience

If you would like to find out more about Property Finance Partners. Please visit the home page.

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You have found your dream home in London, and you want to move forward with the purchase. Like many, you decide to sell your old property to buy the new one. Unfortunately, selling your previous property can take time.

What should you do? 

Well, you don’t need to worry. While short term bridging loans are available in London, you can always get the right amount of money to buy your new home.

Short Term Bridging Loans Explained

A short-term bridging loan is a type of loan that can be provided to meet the needs of customers until they can obtain long term finance of their own (mortgage). It is used to help cover financial difficulties between the process of buying new real estate and selling the existing property, often known as “bridging the gap.” Bridging loans are also known as “temporary financing” or “swing loans”. 

Further reading bridging loans

Explaining Secured Property For Bridging Loans

A bridging loan is a guaranteed loan. This is because the customer must place property as collateral. This property may be in the form of a borrower’s asset.

Your collateral house does not have to be in London, but it does have to be in the UK.

The borrower will be asked to guarantee a loan with some form of security. Heavy equipment, trade equipment, inventory or other commercial or residential real estate owned by the borrower, and even property involved in the purchase process, can be used as collateral for the loan.

You can access short-term bridging loans with the right security. However, the actual amount of money mainly depends on the value of your property. 

A bridging loan is indeed safe, but you must not forget that the loan comes with a higher interest rate due to it being a short-term loan. 

Important: Your property is at risk if you don’t keep up with the repayments.

However, before applying for this loan, if you conduct thorough research, you will easily find lenders who offer the right amount of money at a reasonable interest rate for you.

Where Do I Acquire Bridging Loans In London

To get the best bridging loans in London there are specialised bridging lenders in London, Your best option would be to seek a broker who deals with bridging loans as they will have access to the whole market and can get you the top bridging loans in London.

Applying online is much faster and more reliable than any other conventional way. Using this method, you can easily find the lender of your choice who will offer you an attractive loan rate with favourable loan conditions.

Online search is convenient; you can request it from a computer that has internet access from anywhere in the world. 

The borrower can google various online loan websites that offer bridging loans, by simply searching “bridging loans London” or “residential bridging loans London”. 

Online brokers will quickly check the information you provide on the form and contact specialised lenders who can offer the best bridging loans in London for you. You only need to fill out a short form to apply for a loan.

A broker collects the loan information and compares lenders to find the most suitable lender for your situation.

A strong relationship with a broker can be helpful when applying for a short term bridging loan. They can explain what is required to get the best value out of a bridging loan in London. Try to find a broker in London with “whole market access”.

Get a No Obligation Bridging Loan Quote Today or Call 020 3393 9277

Explaining Some Uses Of Short-Term Bridging Loans

The borrower can be an individual or a corporation and the terms of the loan depends on each individual situation.

The purpose of the loan may be:

• To immediately purchase a house, pending a long-term mortgage agreement. 
• Commercial real estate transactions. 
• Purchase of land
• Property purchase at an auction

Open and Closed Bridging Loans

There are two types of loan to understand; open and closed bridging loans.

An open bridging loan is provided to a borrower who implements a plan to purchase a new home without agreeing on the terms of sale for an existing home, for example with no clear exit strategy.

Closed bridging loans, on the other hand, are provided to borrowers who have agreed to the conditions and have a clear exit strategy in place.

Want to know more about obtaining a bridging loan for property development?

What Terms Can I Expect

Bridging lenders typically permit 65% loan to value (LTV) of the secured property.

It is possible to find a higher loan to value borrowing but bear in mind this will entail higher interest rates in the long run.

A standard bridging loan will range from £25,000 to £5,000,000. Some lenders may also provide bridging loans for a more significant amount if necessary. 

The repayment terms for a bridging loan usually ranges from 2 weeks to a maximum of 12 months. Bridging finance interest rates vary typically from 0.4 to 2% monthly.

Interest rates can be applied to repay in three ways. 

1. At the beginning of the loan term, known as (retained)
2. On a monthly by month basis
3. At the end of the loan term (Rolled or deferred)

Ultimately the term of the loan will depend on the lender, the security and the borrower’s situation.

Excellent credit history is always beneficial to you. This will help you get the best rates and terms for your individual situation. 

Today, most London bridging loan lenders offer short term loans to freelancers or people with a bad credit history who in the past had difficulty obtaining loans and mortgages, so long as you have collateral.

Buying a home in London with bridging finance

In Conclusion:

When buying a home in London always consider doing so with a short term bridging loan.

Property is required as security and you should always have a clear plan and exit strategy. Find a broker with “whole market” access to get the best possible rates and terms without hidden charges, who will guide you in the right direction.

Property Finance Partners has over 100 years of combined experience in property finance. Find out what we can do for you call 020 3393 9277 or Email: [email protected]

If you are a property investor, homeowner, or real estate agent, then you have probably heard of the finance term: Bridging loans. If not, then not to worry, we will brief you in this post.

We all know a house is an essential buy-in people’s lives, and finding a way to purchase your dream home can sometimes be challenging. Especially when availability for fast finance is not there. Buying a house involves proper planning, careful consideration, and most importantly, a suitable loan.

An affordable mortgage is critical to buying a house. But what if you are looking for renovation finances to work alongside your purchase. Then, you might need extended funding for it. And when it comes to obtaining money, we look for the best residential finance available.

We all have the belief that housing finance is only possible for purchasing a new home, but on the contrary to our general view, any homeowner can get a loan for renovation or refurbishment of a house too.

Now, you must be wondering how?

So, to help you out, we are going to shed some light on the underrated finance product of Bridging loans.

GET TO GRIPS WITH BRIDGING LOANS

Bridging loans are a short duration loan provided by certain banks and specialised lenders until the customer can find permanent financing.

It helps in removing any obligation and offers urgent cash quickly. Also known as interim finance or swing loans, it is most suitable for times when people look out for fast cash flow.

 The Need For Bridging Loans

Those who are wondering about the need for bridging loans, here are some benefits to this financial instrument.

• It provides immediate cash flow.
• Easy to access.
• Less complicated than traditional mortgages.

What Is A Refurbishment Bridging Loan?

Usually, bridging loans are adopted by property developers as it provides easy money for building and developing costs.

The homeowner can also benefit from it, as one can buy a home with a bridging loan and use it to refurbish the property while the current house is on sale.

Utilising bridging loans for property refurbishment?

As we already mentioned above, it is a fast, flexible, and reliable way to buy a home. The perfect solution for buyers looking for cheap run-down houses to purchase.

So, by using a refurbishment bridging loan, the customer can purchase the house and money for repairs or renovation and later sell it with a potential profit.

How To Buy A Home With A Bridging Loan?

If you’re looking for some help in purchasing a new property, then bridging finance may be the answer. It helps in purchasing a new house when you are short on cash flow.

Suppose you have an existing house that you want to sell, and along with that you also want to buy a new property. So the plan is to sell the existing house and then use the same money to buy a new one. But, that can be tricky as we all know, selling a home can become complicated at the best of times.

It requires time and patience to get what you are looking for, which can be a problem for those who require money quickly.

In such conditions, bridging loans can be a saviour as you can obtain the cash flow to buy the new property quickly.

The time duration provided gives you time to sell the old house and get the right price you are looking for. Read More on getting a bridging loan to buy a home.

How Is A Refurbishment Bridging Loan Different From A Regular Loan?

If you have applied for a regular mortgage, then you will surely be aware of how troublesome that process can be.

To start, it is not easy to get a loan for an un-mortgageable property. Secondly, most of the traditional home loans are generally granted for the long term.

Finally, the mortgage will get quickly rejected if the property has structural issues or has a value under the asked limit. Considering all the limitations we mentioned above, bridging loans are ideal over a traditional mortgage.

 Cons Associated With Bridging Loans

The only cons we have come across so far is that the interest rate of bridging loans is high as compared to other loans.

Usually, it has hefty fees too. Another con of such loans is, it can be assigned for a short period. However, that can be acceptable for a customer who needs the cash instantly.

Despite its numerous cons, the bridging loan has more benefits and works well for all those who are in need of quick cash flow.

 Bridging Loan Costs

The cost of bridging loans is distributed into three main categories which are the following:

• Arrangement fees:- It is the process fees which is generally 1-2% of the total capital.
• Interest:- The interest for a loan that you can pay in a monthly instalment or a one-time payment when the duration of your loan ends. Moreover, the interest rate of such loans is comparatively higher
• Exit charge:- As the name suggested, it is the cost if the users decide to redeem a unit trust or make some other investment.

All the charges can be varied. Most of the finance companies don’t charge any exit fees. So, our advice here is before jumping on any services, conduct proper research with professionals, and give a thought to its interest rates and arrangement fees.

Other costs associated with bridging loans are valuation and legal costs.

Conclusion

There you have it, we have mentioned all the essential details regarding the refurbishment home loan.

We know that the decision of buying a home takes courage. And honestly, most of the people struggle with a down payment for it. So, in such cases, bridging loans can be a massive help for you.

Not only does it provides the initial investment, but it also gives you enough time to look for some other source of income.

Find out more about property finance solutions: Contact Property Finance Partners on 020 3393 9277 or Email: [email protected]

Also known as bridging finance, bridging loans are a type of loan secured against your property. While similar to a mortgage, the key difference is that bridging loans meet a short-term requirement, whereas mortgages cover long-term needs. Typically, bridging loans come with high-interest rates. That’s why it’s imperative to determine the overall cost of bridging loans before you sign on the dotted line.(

Information on bridging finance

ARE YOU ELIGIBLE FOR BRIDGING LOANS?

Loan providers generally need property as security. Depending on the provider and amount of loan required, you may have to own more than one property to meet the criteria. You may also need to show income proof. Loan providers may require you to have a business plan if there is a commercial aspect to your plans. If you’re planning to construct a property, then you may have to show your track record. 

WHAT IS THE COST OF BRIDGING LOANS?

In addition to bridging loan interest rates, there are several other aspects to take into consideration when determining the overall cost of bridging loans. 

ARRANGEMENT FEES

Bridging loan costs entail arrangement fees, and they generally quantify to a percentage of the loan. Around 2 percent is common, but some loan providers may decrease to 1 percent if you want to take out a large sum, and others might waive this fee entirely. For example, for bridging loans of £500,000, this would be a one-off cost of £5000-£10,000.

Pro Tip: Avoid brokers who charge hefty upfront fees that aren’t refundable. 

VALUATION FEES

To set up bridging loans, an evaluation of the property (or properties) the borrower has placed as security needs to be done. It can be payable to the lender or surveyor, and the cost will vary depending on the value of the asset, location, and evaluation type required. For a £500,000 property you are looking at around £500 evaluation fee. Keep in mind if you’re securing more than one asset or property, then you may need to pay extra valuation charges, as a separate fee will be required for each. 

EXIT FEES

Another thing to take into account while calculating the overall cost of bridging loans are the possible exit fees. Some loan providers charge a redemption fee for eradicating their charge from a property that is already secured. Around 1 percent is standard, and it is added to the loan when redeemed. So, on a £500,000 loan, you would be expected to pay around £5000.

SOLICITOR FEES

Any solicitor fees and redemption fees come into the category of the “legal costs” when determining how much a bridging loan would cost you overall. Loan providers will use a solicitor to process the legal, due diligence. This will be in addition to your legal costs and the sum you’ll end up accountable for will fluctuate, depending on your council.

Pro Tip: Use a bridging loan calculator to analyse the costs of bridging loans.

Pro Tip: Use a bridging loan calculator to analyse the costs of bridging loans.

WHAT IS THE INTEREST COST ON BRIDGING LOANS?

The overall cost of bridging finance also boils down to how much interest you will pay and how the loan provider will charge it over time. Typically interest is from 0.40% to 2% monthly. Loan providers charge interest in three different ways:

MONTHLY

This works similarly to an interest-only mortgage. You pay the interest off every month, and it isn’t added to the loan total.

DEFERRED OR ROLLED UP

For borrowers who don’t desire ongoing monthly payments, the interest isn’t paid every month but just added to the final sum, and settled at the end of the term of the loan. 

RETAINED 

You pay the interest for a specific number of months, and the full amount is payable when it’s time for settling up the final payment.

The total interest is determined at the start of the term, based on how long you’re borrowing for, and you’ll be provided with a settlement outline at the end. 

Having doubts regarding the bridging loan interest rates? Contacting an expert is highly recommended to make the best decision.

HOW TO GET THE MOST COST EFFECTIVE BRIDGING FINANCE RATES?

The average cost of a bridging loan can vary significantly depending on the loan provider and how high-risk the borrower is deemed to be. The key to getting the best bridging loan deal is to have whole-of-market access and to fulfil the eligibility requirements with as many loan providers as possible. Even though what’s acceptable at one loan provider might be disapproved at another, lenders tend to preserve their most favourable rates for customers with the below aspects:

• A practical exit strategy 
• Good security
• Property development experience (if building)
• Clean or good credit history

HOW MUCH DEPOSIT DO YOU NEED?

To determine the sum you can borrow, it is essential to consider how much of a deposit you are willing to give. Most bridging loans are provided with an LTV (loan to value) of 70-75 percent of the gross loan amount, so many lenders expect you to have a deposit of at least 30-35 percent. You can secure bridging finance with higher LTV – up to 100 percent in specific scenarios – but loan providers generally only provide these deals when you are ready to put up additional security, for example by securing the loan against another asset/property or assets/properties. 

ARE BRIDGING LOANS EXPENSIVE?

When comparing bridging loans to other types of funding out there, it does look rather expensive. Take into account bridging loans are short-term, flexible loans for a particular purpose. Provided to borrowers who might not be eligible for a traditional mortgage or financial help. With the high risk, loan providers usually have their interest percentages high. 

THE FINAL VERDICT

We hope that this post has helped you gain a quick overview of the cost of bridging loans. 

If you want to know more or have any queries regarding the bridging loans, then you should get in touch with a  bridging finance experts. 

We at Property Finance Partners have over 100 years of combined experience within the property finance sector, including bridging loans. Contact us on 020 3393 9277

Bridging loans are designed to be arranged quickly, generally to meet an urgent requirement. Consequently, it makes then an alluring alternative to traditional mortgages.

In the age of smartphones and same-day delivery, we’re used to quick wish fulfilment. With a few clicks a delivery drone drops packages on your porch within hours. However, when it comes to getting a mortgage, things are quite different.

The standard mortgage approval procedure tends to take between 18 and 40 days. But, no one has a clue about where this widely-quoted time-limit comes from. Of course, if you ask around or check out finance forums online, you’ll find mortgage applicants saying 16 weeks or even more.

No mortgage lender will say upfront that it is going to take at least two months to process your application but this is often the reality especially during the busiest buying seasons. Processing identity proof, income proof, salary slips, references, credit checks, property valuation, etc. all make for a demanding and time consuming process.

On top of all that, any failure to come up with the right supporting documentation, in the ideal format, adds more days or even weeks. But, the good news for buyers is that there’s a quicker option to source funding for their purchase that avoids the requirement for such a time-consuming checking procedure. And that alternative way is fast bridging loans!

First Thing’s First

WHAT ARE BRIDGING LOANS?

Bridging loans are a quick, short-term secured borrowing of money which enables buyers to move fast when they need to. They are secured for the lender – generally against the property value – for either a property that’s already owned or the one that’s being purchased. Occasionally a charge is taken out against both properties to accomplish the LTV (loan-to-value) ratio you need to reduce your borrowing cost.

Learn more about bridging loans

HOW MUCH CAN YOU BORROW WITH BRIDGING LOANS & FOR HOW LONG?

The amount you can borrow with a bridging loan hugely depends on the asset you are securing the loan against. This will generally range from 65 percent to 80 percent of the total asset value.

Once a surveyor assesses the property value, a lender will provide you with a quote based on the LTV. But, if the property is considered to be in the hands of a“high-risk” borrower, then LTV could decline as much as 50 percent. You could also borrow more money – up to 100 percent LTV, however this would require putting up more than one asset to secure the loan.

For more on terms of bridging finance click here

This will not only cost you more in additional legal valuation fees, but it could also be very expensive if you can’t repay the loan, and your assets could get repossessed.

Bridging loans are a short-term type of finance and are generally taken out over less than one year, sometimes for only a few weeks. Of course, longer terms are in existence, but you’re not going to find anything over three years.

It’s always worth remembering – the longer the term, the more interest you will pay.

IS A BRIDGING LOAN THE IDEAL SOLUTION FOR YOU?

Before finding out how fast you can get bridging loans, it is smart to first decide whether bridging loan is the right solution for you.

To Trade up before a sale has completed 

You’ve found the ideal new property that suits you; more impressive, in the perfect location for a growing family, for a shorter commute, or on the perfect side of the street, etc. But, the sale on your current property isn’t yet signed and sealed.

For many people hoping to purchase the house of their dreams, paying a little bit more for quick bridging loans to secure the ideal property is entirely worth it.

DOWNSIZING BY USING A QUICK LOAN

If you’re wandering around in a property that’s larger than you truly need, then you may want to downsize to a more convenient size, location or closer to family. The “ideal” home right next door to loved ones doesn’t come up often. Instead, you have to be able to buy quickly – maybe even before putting your current property on the market. And you might have to do some enhancements on your existing property to ensure it goes for the ideal price.

Bridging loans can enable you to make a smooth one-move transition, which avoids the demand for temporary rented accommodation and the cost of two removals with short-term storage.

Find Out more in buying a home with bridging loans

PURCHASING PROPERTY AT AN AUCTION

Some of the most unusual and interesting properties are sold at auction, and you can find some absolute-bargain repossessed properties.

A property auction used to be considered the safeguard of bold developers ready to take a punt with their own cash. However, well-organized homeowners and would-be landlords can now get involved themselves without any risk as long as they know beforehand how to handle their finances.

The 4-week gap between the catalogue publication and auction date is adequate time for a nimble solicitor to perform the property searches, and for you to get the property inspected – or at least to visit with an experienced and knowledgeable builder. However, the gap between hammer-fall and payment deadline isn’t enough to set up mortgage finance.

Moreover, many auction properties don’t fulfil the “habitable” requirement of a mortgageable property. And that’s when fast bridging loans come into the picture as an effective solution to these problems.

FAST BRIDGING LOAN FOR UNINHABITABLE PROPERTY

Even a million dollars may not buy you a property that you can get a mortgage on – if it doesn’t have a fully functional bathroom and kitchen. That’s when bridging loan comes in – to cover the gap between purchasing and getting the essential remedial tasks completed so that you can apply for a standard long-term mortgage with success.

EXTENDING THE LEASE TERM ON A LEASEHOLD PROPERTY

Learn more ways in using a bridging loan

Get a No Obligation Bridging Loan Quote or Call 020 393 9277

HOW FAST CAN I GET A BRIDGING LOAN?

The short answer to the question, how fast can you get a bridging loan is totally dependable on what you’re trying to do!

Is it purchasing a residential property for your own use? If so, then the standard completion time can range from four to six weeks. If it’s for investment purposes, then completion time can be much faster than this. In some scenarios, it can be as fast as three to five days, though it varies depending on the situation.

Get a No Obligation Bridging Loan Quote or Call 020 393 9277

WHAT CAN DELAY A BRIDGING LOAN APPLICATION?

Several factors affect the completion time of a bridging loan. Some lenders can complete applications a lot faster than others.

There is generally a conflict between preserving a short-term bridging loan as fast as possible and preserving the lowest repayment rate. Similar to other types of lending, quick bridging loans are priced according to the degree of risk to the lender affecting repayments and interest rates available.

For a bridging finance application to be completed in a few days, the lender would have to perform very few checks. For example, thorough validation reports could be very time-consuming, however, it is vital that quality work is conducted here, contrasting with the demand to complete quickly.

As such, some lenders may forego a survey report in some scenarios. The same can be applied for legal searches however these can take weeks to come back. And to get around this, some lenders will consider title insurance as a replacement. These factors can take a significant time off the bridging loan application procedure, but this will come at a cost. This will significantly increase the risk to the lender, as they end up reducing the understanding of their security property.

HOW TO SPEED UP A BRIDGING LOAN APPLICATION?

Your broker and lender play a vital role in ensuring your bridging loan application is completed as quickly as possible. And of course, the borrower approach is equally essential to ensure fast completion. When a lender starts a full application after granting a new bridging loan in principle, they will let you know what exactly is required on your end to progress to a complete offer. This will normally include documents like ID confirmation, a property valuation, etc. If you want to progress the application even quicker, all things asked must be sent back on an immediate basis, as any delay will directly prevent your application progress.

THE FINAL VERDICT

With everything about fast bridging loans taken into account, you would probably find them as an appealing alternative to traditional mortgages. However, you must get in touch and talk to an expert bridging loan adviser first who can help walk you through the best options available for you.

We at Property Finance Partners have over 100 years of combined experience within the property finance sector, including bridging loans. Contact us on 020 3393 9277

A bridging loan is a short-term finance method used to help you quickly purchase a new property while you arrange the sale of your current property. It bridges the gap between the sale of your current house and the completion dates in a chain.

Borrowing bridging loans are typically for a short period, i.e. 1 to 12 months, and are payable in full (principal and interest) at the end of the term instead of monthly payments like those of standard loan finances. However, this does result in bridging loans being quite expensive due to high-interest rates.

In other words, a bridging loan is an additional loan you obtain to purchase a new house on top of your mortgage loan on the current house until it sells.

This means that you’re indebted to two lenders during the bridging period, and both charge interest respectively on the advancements made by them. Due to the higher risks involved in lending out bridging loans, lenders may charge higher interest rates than traditional loans.

So, before taking out any bridging loans, you should have a comprehensive understanding of how it works, and how expensive it can get.

Get a No Obligation Bridging Loan Quote or Call 020 393 9277

Bridging Loans Can Be Used In Either Of The Following Two Ways

1. Clear off the mortgage and a portion of the down payment:

For example, your current house has been valued at £500,000, and you owe your mortgage lenders a sum of £300,000. By acquiring a bridge loan of £400,000, you can pay off the mortgage on your previous house of £300,000 as well as loan closing costs and fees of around £10,000. This leaves you with a total sum of £90,000 as a down payment for your new house.

2. Apply for a second mortgage for the new home:

Similar to the example above, let’s say your current house has a fair value of £500,000 with £300,000 on a mortgage, leaving you with £200,000 as equity. You’ll be able to obtain a bridge loan of up to £160,000. 

This way you can use your home equity in advance to apply for a second mortgage for your new house, which you will be getting in the future from the sale of your previous house. 

In a perfect world, your previous house sells and you’re able to pay off your mortgage as well as the bridging loan, however, most of the time, in reality, things don’t work out as well as we would like. 

In case, your previous house doesn’t sell in time for the payment or gets sold at a lower rate than what was expected, you might end up with the burden of a mortgage as well as a high charging bridging loan, resulting in extreme financial stress. Therefore, to get the best possible offers, you need to conduct plenty of research before deciding on a bridging loan.

Typical Costs Associated To A Bridging Loan

A bridging loan has high-interest rates as well as various other hidden fees attached to it, which can end up costing you a lot. You should ask your lender for a detailed break up of all the costs involved. Regardless of your lender’s help, you will typically be dealing with the following fees when acquiring a bridging loan:

●    Interest Charges: In comparison to conventional loans, interest on bridging loans is charged monthly instead of annually. Depending on your Loan-to-Value (LTV) ratio, the interest rate may be anywhere between 0.4% and 1% per month. The lower the LTV ratio, the lower the rates, and vice versa. Depending on your loan structure, you can pay off your interest in any of the following three ways:

1. Monthly: You pay your interest monthly while the total loan amount isn’t affected. 
2. Rolled-up or Deferred Interest: Instead of making monthly repayments like standard loans, your accrued interest gets ‘rolled up’ with the principal amount and further interest gets added onto the sum of them. The final balance is paid in full at the closing of the loan.
3. Retained Interest: Your total interest payable is calculated at the beginning of the loan at a fixed rate, and is guaranteed to you by the lender along with the principal amount. 

●    Lenders Arrangement Fees: A lenders arrangement or facility fee is charged on the net or gross loan amount, at a rate varying between 1% and 2%. The higher the loan amount, the lower the lender’s arrangement fee and vice versa. 

●    Administration fee: This is charged only once the loan has been taken out,  not during the application process. 

●    Valuation fees: Valuation fee is charged to verify the value of the property being used as security. This fee varies depending on the condition, location, and value of the collateral property.

●    Redemption/Exit fees: An exit fee is also charged at around 1% of the loan amount at the time when the loan is closed. It is a legal cost incurred by the lender to remove the charge on the collateral property.

Get a No Obligation Bridging Loan Quote or Call 020 393 9277

How To Get The Best Possible Deal For A Bridging Loan?

You shouldn’t only be looking at a cheap option as the best deal for you, but also other factors involved too such as how quickly you can get the loan, the repayment structure, etc. 

Your best chance at finding the most suitable deal for yourself is comparing as many lenders as you can. Of course, you can benefit off the ever-dynamic and highly competitive industry where lenders would offer you lower rates or better packages than their competitors to earn you as a customer. But, the following are the significant factors that are considered by lenders when assessing a bridging loan application:

The Exit Strategy:

The exit strategy is another name for your repayment method of the bridging loan you have acquired. Before approving your loan application, your loan provider will assess whether your exit strategy is viable enough for you to make timely payments. You can typically opt for any of the following exit strategies:

● Sale of property

● Sale of investments

● Inheritance

● Sale of business or shares

● Refinancing the bridging loan to mortgage

The most popular of these strategies is selling the old house that you’ve provided as a security to your loan provider and refinancing your loan to a longer-term mortgage. If you plan to sell your house, the lender will need proof to ensure that the house will get sold within the loan term you have applied. You can provide a link of your house up for sale on your real estate agent’s website as evidence.

If you plan to refinance the loan to a mortgage, your lender will want to make sure that you’re eligible to get approved for a mortgage loan, as the terms for these are very different. You will have to obtain a decision from the mortgage lender in writing, to prove that you are able to quickly refinance the loan to long-term finance. 

Experience in Property Development:

If you’re a property developer, the loan provider will want proof of your past records to check your credit history. It will be used as evidence as to whether you’ve completed loans on time previously. Depending on a good history of your past projects, you may be offered lower or higher interest rates.

Read more and understand property development

Employment Status:

In case, you’re not a property developer and are applying for a bridging loan for the very first time, the lender may want proof of your monthly income to ensure you have enough funds to pay off the loan at the end of the term.

Loan to Value:

The loan to value ratio is another major determinant. A high LTV ratio leads to higher interest rates due to greater risks involved in case of default. On the other hand, lower LTV ratios have lower interest rates.

Sufficient Collateral:

You’ll have access to the best deals in the bridging loan market if your security property is located in a sellable location, is in good condition, and the lenders are convinced that you’ll be able to sell it quickly and lucratively.

Credit History:

Good credit history isn’t a compulsory requirement to acquire a bridging loan,  however, it is a significant determinant of the interest rate you will be offered. A good credit history will result in lower risk to the lender and hence lower interest rates for you, and vice versa.

Type of Bridging Loan:

The cost greatly depends on the type of bridging loan you’re applying for. For example, an open bridging loan requires you to pay back the loan within three years, but without you having to specify a repayment date. This involves a higher risk for the lender and will result in you paying higher interest on the loan.

Similarly, a close bridging loan requires you to provide a specific repayment date, which can only happen after you have finalized the sale of your house. A close bridging loan allows you to get credit on lower interest rates, which will ultimately benefit the customer more.

A first charge bridging loan leads to your loan provider having the right to your property in case you fail to sell the house. This provides your lender with a higher degree of certainty and results in lower interest charges for you the customer.

A second charge bridging loan means your mortgage lenders will have the first right to your house and not your bridging loan provider. This means lower certainty and security for your lender which may result in high-interest rates on loan.

Conclusion

As complicated as it may sound, a bridging loan can be an excellent option to profit from in the right circumstances. Given the expensive nature of bridging loans, it is suggested that you look for other finance options and speak with an expert before settling for a bridging loan.

Please view our bridging finance https://www.propertyfinancepartners.com/bridging-loans/

For more information on bridging finance and if you require the best rates contact property finance partners. Call 020 33939277 or email [email protected]

HOW TO GET A BRIDGING LOAN TO BUY A HOME

When you’re looking for a new property, you have to have a budget on hand. But in some cases, it’s hard to find a suitable home for the price you can afford. In this situation, you may turn to loans. But what loans can you use to buy the house of your dreams? Well, bridging loans could be the solution.

Bridging finance is used by many people for the acquisition of a new home, as it’s quite a flexible and fast way to obtain funds for a new property. How can you get a bridging loan to buy a new home?

For more information on bridging finance and if you require the best rates contact property finance partners. Call 020 33939277 or email [email protected]

Features Of Bridging Loans?

Bridging loans are taken for a short period of time and they allow you to quickly take the opportunity to buy a house on a fantastic offer before you manage to sell your old property. It’s the same if you find your dream home at an auction – you will need cash quickly, and a bridging loan is a way to go. 

There are two types of bridging loans: 

·      Open Bridging Loans

Open bridging loans come with no fixed repayment date. This type of loan will have to be paid off within one year, no matter what. 

·      Closed Bridging Loans

With closed bridging loans, the situation is different. These have a fixed repayment date, unlike open ones. This type of loan can be used if you have exchanged contracts, but you are still waiting for your property to sell.

What Can You Use Bridging Loans For?

As mentioned, bridging loans are useful when you want to purchase a home quickly. Every year, about 250,000 new homes are needed to deal with the continuously growing population of the United Kingdom.

That means that some people will think of using a bridging loan to obtain one of these properties without the hassle of a mortgage.

Here are some specific situations when a bridge loan would be suitable for you: 

• Auctions: If you’re at an auction and someone is asking a great deal for a property, then you can use bridging financing for it. It is a solution when there is a deadline for your purchase. In general, there is a 28-day deadline for an auction property, so you will need to act quickly. 
• Mortgage chain: Some people are stuck in a mortgage chain. If you’re one of them, then you surely want to break it, and you can do so with a bridge loan. It will allow you to buy your new house completely freely.
• Buying a house before selling your existing one: If you are moving abroad, upsizing or downsizing, you can get this loan and buy a new home before you succeed in selling the one that you already have. 
• Cash for quick property investment: You may be a landlord, and want to ensure that you get to buy a property before another landlord takes it. A bridge loan could be used in this situation. 

How Are Bridging Loans Priced?

Since these loans are borrowed for a short period, they will be priced every month. But compared to the usual mortgage, bridging loans are more expensive.

Usually, you will have to deal with fees of between 0.5% and 1.5%. Not to mention that the annual percentage rate for these loans can go between 6.1% and 19.6%. This is why it’s essential to know whether you will be able to deal with the repayments for your bridging finance before making a move. 

Apart from these fees, there are set-up fees that you will have to deal with as well. In general, they will be about 2% of the total amount of your loan. 

A bridging loan calculator could help you determine exactly how much you are going to pay in fees for your bridging finance. 

For more information on bridging finance and if you require the best rates contact property finance partners. Call 020 33939277 or email [email protected]

How Much Can You Borrow To Buy A House?

Before you buy the house of your dreams, it’s essential to know how much you can borrow as a bridging loan.

On average, you can get somewhere between £25,000 and over £25 million, depending on your circumstance.

However, that doesn’t mean you will be allowed to borrow as much as you want. It all depends on the maximum loan-to-value ratio. You will be permitted to borrow a maximum of 75% LTV of your property’s value.

The good news is that if this is your first-charge loan, you will have the opportunity to borrow a more significant amount than if it was a second charge loan.

Interest Rates On Bridge Financing

As expected, bridging loans will also charge you interest rates on a monthly basis for your debt. But they will not quote the APR since you are getting a type of financing that may last less than a year.

For bridging loans, interest is charged differently. One of these methods could be a rolled-up or deferred interest. This means that you will pay all of your interest at the end of the period when you also repay the original loan.

So, although you don’t have to pay your interest month by month, it will be charged at the end as it adds up to the loan with each passing month. You just pay for it later.

Using the monthly interest plans is another very common option. It means you are paying the interest each month, and it is not added to the loan balance. The balance has to be paid at the end of the term still though.

And lastly, there is the retained interest alternative. This means you borrow the interest from your bridging lender from the moment you apply for the loan.

Therefore, this will cover the monthly interest payments for a specified period. When the term ends, you pay everything back to the lender.

In some instances, combining these types of interests is possible. That being said, you can, for example, retain your interest for five months, after which you can make monthly payments.

Where Can You Get Bridging Loans?

Whether you are looking for London bridging loans, or bridging loans offered in other cities around the UK, knowing your options is essential. For bridge financing, you can get the money from small lenders or international banks, depending on your situation and the amount you wish to borrow.

Looking on the Internet will reveal many options for you, and the wise move would be comparing everything that you find and going over it with a professional. It would be a mistake to go with the first one that you find since it may charge more interest than another company. 

How To Become Eligible For Bridge Loans For House Purchase?

As expected, you can’t get a bridge loan without meeting some specific requirements. After all, you have to be someone the lender can trust. If you seem like a risky choice, you may be denied access to a bridging loan. 

Here are some things that will help you become eligible to obtain a bridging loan. 

Have a Good Credit Score

With any loan that you take out, credit rating is an important aspect that is taken into consideration.

Of course, it doesn’t instantly mean that your bad credit score is a deal-breaker when trying to obtain bridging financing. However, generally speaking, someone with a good score doesn’t pose as much of a risk for the lender, than someone with a poor score.

If you want to increase your chances of obtaining bridging finance, make sure to work on improving your credit rating.

Get Some Development Experience

It’s recommended to have some experience when it comes to developing properties. Once again, this doesn’t mean that having no experience gives you 0 chances of using this type of financing. However, knowing the basics (at least) will provide the lender with a better impression of yourself and install more trust in the relationship.

Someone with experience will find bridging loans with better rates, mostly because lenders know you are not as much of a risk as someone with no experience.

·      Have a Good Exit Strategy

A good exit strategy could also boost your chances of being eligible for a bridging loan. The exit strategy could either be the sale of the property or a remortgage to repay the capital. Therefore, the lender may ask for proof that one of these situations will be achieved in one way or another. 

Of course, some lenders will accept something else as an exit vehicle, like endowments, investments, or anything else along those lines. But they will still require proof that you will be getting these funds within a certain amount of time. This way, they will be more willing to offer you the loan.

The Bottom Line

With the growth in demand for bridging loans, you may be wondering how to get one yourself. Some things will give you a better chance at becoming eligible, such as having a good exit strategy, a good credit score, and some property development experience, among others.

Hopefully, this article has helped you learn how bridging loans work. Now, you must do your research and find the right lender so that you can get that dream property you’ve been longing to buy.

Please view here for a bridging loan finance https://www.propertyfinancepartners.com/bridging-loans/

For more information on bridging finance and if you require the best rates contact property finance partners. Call 020 33939277 or email [email protected]

As of today, we all have less than one month to claim any mis-sold payment protection insurance (PPI). Statistics show that around 64 million PPI policies have been sold in the UK – most of them between 1990 and 2010, with some policies dating as back as the 1970s.

The History of PPI

As some of you may probably know, the payment protection insurance was established in order to cover repayments that people couldn’t pay themselves due to certain circumstances. For example, PPI would cover any repayments of a person that could not work due to an illness, accident, or death or was made redundant.

More than 35 billion pounds have been repaid to customers since 2011, with banks setting aside billions and billions for this type of compensation and refunds. Naturally, a deadline was probably bound to happen sooner or later – you can do so and reclaim any mis-sold PPI until the 29^th of August 2019.

In today’s article, we will be talking about everything that you need to know about the PPI deadline. This way, you won’t miss a single thing and you’ll be able to properly claim back your money.

Are You Entitled to PPI Compensation?

You may have been mis-sold payment protection insurance if you have purchased a loan, mortgage, or any kind of credit product – such as a credit card – up until 2006. Keep in mind that mis-selling could have taken place after this year as well.

Given that there is no limit on how far back people can claim payment protection insurance and that most of us don’t actually know if we’ve been mis-sold PPI, we should all consider making a claim.

Even if there’s a small chance that you are owed compensation, then make sure that you do not miss the deadline.

What Happens to the Unclaimed PPI funds?

As mentioned before, the money available for compensation and refunds has been set aside by the banks of the UK. Obviously, any unclaimed funds will be reinvested in these banks.

In short, every bank that is offering refunds keeps the money that the people don’t claim. Basically, we could say that these funds are up for grabs for anyone that has been mis-sold a PPI.

What You May Not Know

If you haven’t filed a claim yet, then you may think that this whole PPI thing does not apply to you or that the process for being awarded a refund is too complicated.

You may also avoid claiming a refund because you had PPI on an appropriate product and nothing went wrong with it – you were happy with your deal, so to say. However, there were some cases in which people were sold a certain product as part of a credit deal.

This should make the sales process questionable and, ultimately, persuade you into applying for a PPI refund.

There are more than enough stories of people that have checked PPI without expecting anything, only to find out that they were owed thousands due to a mis-sold. For example, one person who used a lot of different loans in the past didn’t think that they were eligible for a refund. Later investigations discovered that the person was owed almost 19 thousand pounds.

When Will the Claims be Resolved?

Keep in mind that the deadline date is the 29^th of August. All you need to do in order to take advantage of the PPI repayment is to submit your claim before this date.

If you submit your claim close to this date, it is unlikely that you will receive an answer before the 29^th. However, this doesn’t mean that your claim will get cancelled or denied. As long as you submit it before the 29^th and the bank receives your claim, they will investigate it and return to you with the result.

The bank usually takes around eight weeks to resolve a claim – still, it is known that this process can be longer in some instances. You should be patient.

How Do You Submit a Claim?

There are companies that will offer you their services and make a claim on your behalf. However, keep in mind that the claims management firms will take a rather large part of your compensation for filing a claim for you – up to 24%. For example, if you think you may be entitled to PPI compensation on a buy to let mortgage, you may want to keep it all for yourself.

Naturally, the easiest way to submit a claim is by making one directly to your provider. There are also many online tools that can help you start your claim, fill out the form, and then forward it to your provider, be it Property Finance or anyone else.

Buy to Let Mortgage PPI

Since we have mentioned a scenario including a buy to let mortgage, it is worth mentioning a couple of things about this specific case.

While you can file a PPI claim for this, keep in mind that most companies will reject it – therefore, PPI is worth having. Moreover, as most mortgage brokers were not regulated before January 2005, the window for complaints is little to none.

In short, the sale of PPI starting with January 2005 has been regulated while buy-to-let lending is unregulated – the result is mortgage PPI that does not get much coverage.

What Happens If You Miss the Deadline?

If you miss the deadline of August 29, you can still make a claim – but only if you have experienced exceptional circumstances. If you have to rely on such a claim, keep in mind that you must include as much information as you can when you apply – as these claims will be dealt with on a case-by-case basis.

We strongly recommend you apply for PPI compensation before the deadline if you want to make sure that your claim gets considered.

Concluding Remarks

If you’ve stressed over PPI in recent years, then now is the time to make the most of it, so to say, and take advantage of it as well. As you won’t have to think about payment protection insurance ever again, this is the perfect time and opportunity for you to file a claim and possibly get compensated.

Basically, if you think you’ve been mis-sold PPI, then don’t waste any time and apply for a refund today – it’s free, it’s easy, and you get the chance to solve this matter once and for all!