Bridging loans are designed as short-term financing solutions which can be set up very quickly.
A bridging loan can be used for any legal purpose, whether for the purchase of a residential or commercial property, or land. It can also be used as a way to release funds from an existing property that you own. In terms of security, the loan is secured against a property on either a first or second charge basis or a combination of the two.
The process from start to finish usually takes 5 -7 working days. The loan term can be a period of as little as 1 month, right up to 2 years.
The lenders charge a valuation fee and legal fees. Costs will vary from lender to lender and will depend on the property purchase price or valuation. In addition, most lenders will charge an arrangement fee of somewhere between 1% to 2% of the loan advance. This is can be deducted from the loan advance on completion. Typically. there are no exit fees or redemption penalties, although a small number of lenders do still charge these. In all instances, we will provide you with a personalised quotation detailing these costs before you commence your application.
You can make interest-only payments, paid monthly in arrears or most of our lenders will consider deducting the interest from the loan advance at the outset. (This will be deducted on the loan to value being requested and the nature and specifics of the deal). We will advise various options and pricing in a personalised quotation.
Bridging finance is more expensive than conventional mortgage funding and is a short-term funding option. Therefore it is essential to establish a clear strategy to ensure the loan can be repaid (either via sale or remortgage) to avoid paying high penalty interest rates and possibly losing the property to repossession if the loan cannot be paid.
You will need a defined exit strategy in place to ensure the finance is repaid within the life of the loan. This could include selling the property or refinancing with a more conventional lender once the property is habitable.