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Bridging Loans

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Can I apply for a bridging loan?

Should you reside in the United Kingdom or Europe you can apply for a Bridging Loan – if you have previously been denied funding or have ccj’s, arrears, defaults, bad credit or even no credit we will consider your application. Whether you are a individual, sole trader, trading Ltd company or SPV Ltd company as long as you are legally the owner of the property or will be upon completion of the transaction then we will obtain the funding you require.

  • Decisions in potentially 24 hours
  • Experts in complex funding scenarios
  • No early repayment charges
  • Retain the interest (no monthly fees) service monthly if required.
  • Complete in just a few weeks

What can bridging finance be used for?

  • Broken Property Chain
  • Refurbish or Extend Property
  • Debt Consolidation
  • Cashflow/Capital Raise
  • Development Project
  • BTL (buy to let) Purchases
  • Investment Opportunities
  • Redeem/Refinancing 1st & 2nd Charges
  • Auction Purchases
  • Short Term Lease Property Purchase

Bridging Loans Explained

A Bridging loan is somewhat different to a standard bank loan in the fact it is a property backed facility over a shorter term. The term for a bridging loan is usually no shorter than 3 months and at a maximum length around 24 months. Bridging loans are often used in scenarios where you require funding for a period of time long enough to allow for refinancing onto a longer term product or whilst you are going through the process of selling your property. It can be difficult to choose which Bridging loan is best for you so it is important to speak to a specialist to make sure you select the right lender for your bridging loan requirements. Bridging loans are usually paid in full at the end of the term. Unlike other forms of borrowing, a bridging loan does not require a monthly payment to be made as all interest is rolled into the bridging loan and paid at the end of the term or when you exit the bridging loan.

The application process for a bridging loan is usually much simpler than other types of borrowing and this means applications for bridging finance can complete very quickly usually between 10-14 days this can be extremely attractive when funds are required fast and for time constrained scenarios.

Bridging Finance can be offered against almost any property or land and can be used for several different reasons – its main uses are:

  • Purchasing a property quickly for example auction purchases
  • Buying uninhabitable properties
  • Funding conversion or restoration work on property
  • To prevent repossession
  • Buying property under the market value
  • Business capital injection
  • Development loan exit

The pros and the cons of bridging loans

Pros

  • Applications usually complete in under 14 days so bridging finance is fantastic for when funds are needed quickly.
  • Where there is normally no monthly payments to be made, a bridging loan can be perfect for raising capital when cash flow is tight but you have the assets to repay the loan.
  • The bridging loan market is very, very competitive and this is reflected in the rates available. Some lenders are offering rates at as little as 0.37% per month, bridging loans have never been cheaper!
  • When a property is being purchased under value, lending can often be calculated on the market value of the property - this means it is possible to purchase a property without the need for a deposit.
  • Bridging finance can be used to purchase property that is deemed ineligible for borrowing using other types of funding, for example a property that is deemed uninhabitable.

Cons

  • Bridging loans compared to traditional mortgages are more expensive. Even though the rates for bridging finance are dropping, traditional mortgages are by far the most economical way to fund most property transactions.
  • As bridging loans are short term it is important to understand that if you have any problems with your chosen exit strategy (method to repay the bridging loan) you can face some serious issues. Failure to repay your bridging loan would eventually lead to repossession and more than likely some hefty costs.

Always consider ‘The total cost’

Many clients will constantly be hunting for ‘the best rate’ for their bridging loan this is understandable right? I mean we want the best deal for our bridging finance and want it to be the most cost effective option on the market. It is important to understand that many lenders offer fantastic rates but behind that there will be arrangement fees, exit fees and various other little hidden fees. This is why it is important to look at the total cost of the facility, not just the monthly interest rate for your bridging loan. It is important to view a full breakdown of costs for the bridging loan before you decide to proceed; this makes it much easier to establish who is offering the best deal, not just the best interest rate.

Is your exit strategy viable?

the most important part to any bridging loan, how are you going to repay the loan? The main danger with a bridging loan is that you are unable to repay the loan at the end of the term. Always consider how the loan will be repaid at the very start and make sure your proposed exit strategy is viable. If your plan is to sell your property make sure the term of the bridging loan is long enough to allow for you to find a buyer and complete the sale. Being forced to find a quick buyer could result in your property being sold for significantly less than you would like. If you’re planning to refinance your bridging loan onto a longer term property loan facility you should try to prepare for this by checking if your application is likely to be accepted. If it is possible to do so aim to get a decision in principle from your chosen lender before completing the bridging loan.

Are you getting the best possible deal?

The difference in cost between bridging loan providers can be quite significant. Some lenders can only be accessed through a limited amount of brokers – this means you might not be able to access the best rates and deals within the market. Get in touch with us now so we can assist you in the best way from the start and ensure your bridging finance requirements are delivered without delays.

Get in touch now to discuss your requirements

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