Bridging Finance

The main types of bridging loans are:

• Unregulated bridging loans – secured against investment properties for refurbishment or conversion to a HMO
• Commercial bridging loans – secured against commercial property which could either be let to a long term business tenant or your own business premises
• Development exit finance – secured against a development project to raise capital before the properties are sold or refinanced
• Auction finance – Auction finance is a specialised type of short-term funding that is used to quickly secure a property purchased at an auction. Auctions are events where properties are put up for sale, often with the expectation of a fast transaction. Auction finance is designed to provide buyers with the necessary funds within a tight timeframe, usually 28 days, to complete the purchase of a property won at auction.

Bridging finance may be able to help if:

• You want to purchase a property that isn’t currently in a habitable, lettable or mortgageable state. This is typically a property with no running water, no working kitchen and no heating.
• You want to either convert, renovate, refurbish or develop a property
• You want to purchase a property at auction
• You want to purchase land

No, depending on the case you can either choose ‘serviced’ interest where you would make the monthly payments in the same way you would on a traditional mortgage, or if there is a refurbishment involved where you would not receive any rental income to cover the monthly payment you can opt for ‘retained’ or ‘rolled up’ interest. Retained interest is where the contractual amount due over the term of the loan is paid upfront, any unused interest would be returned to you. Rolled up interest is where the full amount of interest owed would be added to the loan and any unused would be returned to you. 

Yes, the loan to value is the main factor in the rate that you will be offered. The more deposit you can put down the lower the monthly rate would be. 

There are several options for repaying the bridging loan, the two most common are to arrange a remortgage onto a long term mortgage or sell the property. 

Applying for a bridging loan involves several steps that are similar to applying for other types of mortgages. Here’s a general overview of the process:

1. Initial Chat
   Discuss your plans: Give us a call or email us to schedule a call to initially talk through your plans and what you are looking to do.
2. Documentation Gathering:
   Prepare documents: Once we’ve had a discussion and what you are looking to do seems feasible and we’ve provided an idea of product interest rates, we will email you our documents to complete and a list of documents to provide.
3. Research and Preparation:
   Research lenders: Once we have received our completed documents and requested documents, we will research lenders that offer bridging loans and provide you with the cheapest product options you and the property are eligible for.
4. Decision in Principle and Mortgage Application:
   Once a product has been selected, we will submit the Decision in Principle and Mortgage Application.
5. Underwriting and Approval:
   Underwriting process: The lender’s underwriting team will assess your application and verify the provided information.
6. Property Valuation:
   Valuation assessment: The lenders will value the property and assess its suitability considering factors like location, size and condition.
7. Rental Income Valuation:
   Rental assessment: The lender will also value the projected rental income of the Buy to Let property, considering the condition of the property, local rental market, and other factors.
8. Offer and Terms:
   Mortgage offer: If your application is approved, the lender will provide a formal mortgage offer outlining the terms, conditions, interest rates, and fees.
9. Legal and Regulatory Checks:
   Legal and regulatory review: Your solicitor or conveyancer will review the property’s legal title, ensuring there are no issues that could affect the mortgage or property ownership.
10. Completion:
    Legal: Your solicitor will coordinate the completion process. It’s important to note that the process can vary depending on the lender, your location, and individual circumstances. Working with a knowledgeable mortgage broker can streamline the process, ensure you meet all requirements, and help you find the best bridging loan for your investment goals.

We are highly experienced and do not hesitate to give us a call to talk through your plans.