What is a bridging loan?
A bridging loan is a short-term loan secured on property, designed to move a project or satisfy a funding requirement within a period of 12 months. Bridging loans can be arranged within days and used by individuals or businesses for any purpose until their next stage of financing becomes available – usually from a property resale or refinance onto long term funding.
Whether you are looking to purchase a property, build a property or refurbish a property, bridging loans can be used in residential and commercial property transactions by home buyers, developers, landlords, and investors. Bridging finance can also be used by businesses and individuals in need of fast funding.
Who can use bridging loans?
Property developers and investors:
- Refurbishing unmortgageable or uninhabitable properties
- Property conversion or renovation
- Quickly securing a property
- Auction purchases
- raising capital
- meeting a business obligation
- settling tax liabilities
- purchasing stock
- short term cash flow
- managing probate
- HMO finance
Homeowners and property owners:
- Quickly securing a property
- Break free of a property chain
- Building a home
- Property conversion
- Auction finance
- Cash flow
How much do bridging loans cost?
One of the key differences between a bridging loan and a regular loan is the time it takes to organise funding. With terms from 1 day to 24 months, we can offer full flexibility to meet your requirements.
Bridging loans are typically more expensive as lenders carry out the same amount of work for up to a 12-month return rather than up to 25 years. BFS price each case on its own merits and do not hide fees in the small print or provide short term ‘teaser’ rates.
Interest rates can be determined by loan to value, security type, the profile of borrower, size of loan etc. The headline interest rate is not the only factor to consider when comparing loan offers – it is the total cost of funds including fees.
Once you have applied for a bridging loan, the BFS team are experienced enough to immediately provide you with a written quotation.
Step by step guide to securing a bridging loan
A bridging loan shares similar underwriting and legal processes as a mortgage with a charge secured on the property but typically completes in 10 days dependent upon the legal process.
1. Broker or individual submits an application for bridging finance, stating reasons for the loan and offering a clear repayment strategy. You will need to provide proof of the new property purchase and its price.
2. BFS will issue a decision in principle on the same day which outlines the terms of the finance and what you need to provide in order to obtain the required funds.
3. BFS will then instruct a valuation report. The amount you can be lent is determined by the value of the property.
4. All documents sent to your solicitor for review
5. Client to sign all documentation – once they understand the terms and conditions
6. Agreed funds are released to your solicitor who signs off on all legal aspects of the loan
7. Solicitor makes funds available to you.
How else can you use a bridging loan?
We are a principal lender which means that we work with our own money and do not need to consult any third parties before completing a transaction. This is why we can make you an offer within hours – and draw funds in days, not weeks. BFS is also regulated by the Financial Conduct Authority (FCA) which demonstrates our reputation as a responsible lender.
- No upfront fees
- No product fees
- No exit fees
- No expiry fees
- No redemption fees
- No hidden costs