Bridging Loan Types


Our criteria on bridging loans depends on which fund or lender we use. This means it is not possible to give accurate bridging loan rates and costs without speaking with you directly, however we can give you a guideline that will help you understand what is available within the market.

Bridging Loans for Auction Property

When bidding and then buying a property at auction, you must be confident that you can obtain all of the funds required to purchase outright in a very tight time frame of normally 28 days from successful bid. A successful auction bid can be a legally binding transaction similar to the exchange of contracts in standard property transactions. This makes it extremely important that the time-scale is achieved otherwise strict financial penalties could be imposed on the bidder.

With a successful auction bid, you are normally required to pay the equivalent of 10% of the purchase price as a deposit which can be seized if the balance of the purchase funds is not available when scheduled. It will often not be possible to obtain a mortgage in the required time frame so unless the bidder has cash available, a bridging loan may be the best option. A bridging loan is a short term loan that can be used to purchase an auction property and is usually repaid when the property is either sold or refinanced onto what is deemed, more standard finance, such as a mortgage.

Don’t Miss Out on an Auction due to Financial Issues

The beauty of a bridging loan is that it can be arranged quickly and is more flexible than a mortgage. Lending decisions on Bridging Loans for an auction property can be made within hours of the initial enquiry to the lender and the money can be made available within days. This allows the bidder to easily complete the auction purchase within the time frame specified by the auction company.

Bridging finance can also be used to pay the 10% deposit if required by the bidder. The bridging loan company would need to agree to this prior to the auction date but providing this is acceptable the 10% is normally secured against another property owned by the bidder or another person associated with the bidder.

It can even be arranged so that the bidder received 100% or more of the purchase price so that renovation funds and fees etc are covered. As before other properties will be required as security to enable this.

In order to get the best possible advice on bridging loans, please complete our short application form and we can get a specialist bridging loans expert to get in contact with you. We offer excellent bridging loan rates.

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Bridging Loans for Land Purchase

A land bridging loan is used to often used to help developers, private builders and even self-builders move quickly once they have found a site that they feel is right for their project and has all the correct permissions in place.

Reasons to Choose a Land Purchase Bridging Loan

Banks are becoming less willing to lend on these type of projects. Our advisers are specialists at arranging finance for development sites with potential and we can often structure short term bridging loans so the funds can be released in staged payments pending planning permission.

Once a property is developed it can either be refinanced on to what is deemed more traditional finance, such as a mortgage or quite often the property or properties are simply sold. We work with brownfield sites, development property, residential zoned areas, commercial land etc.

In order to get the best possible advice and bridging loan rates for a land purchase then please complete our application form and we can get a specialist bridging loans and development finance expert to get in contact with you.

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Bridging Loans for Residential Property

The most common use of a residential bridging loan is when you would like to purchase a new property but have not sold your existing property. In these cases it is possible to take out a short term loan that can be repaid when your old property is sold.

Ways to use a Residential Bridging Loan

A residential bridging loan can also be used to repay debt, purchase new investment properties or even for home improvements. Our specialists can work from the market value of the properties not just the purchase price, which is the case with many high street lenders.

A bridging loan for renovation is also very useful in the situation where a high street lender cannot lend on a property because it is uninhabitable.

If you need quick, fast, professional advice then please complete our application form.

The bridging loan calculator can be used to determine the basic costs of bridging finance and bridging loans in the UK. The bridging loan calculator however only provides the costs for 1 type of bridging finance and as many types of projects are funded by bridging loans in the UK a discussion with one of our qualified advisors will additionally help to ensure an accuratation is received.

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Open Bridging Loans

Bridging loans are usually classed as being either one of two types, depending on whether or not you have an exit strategy in place. An Open Bridging Loan is a type of property finance that is available to borrowers who are seeking to purchase a new property before exchanging contracts to sell an existing property. They are useful when you have equity tied up in a property but you are uncertain when the property will be sold.

Buy a Residential or Commercial Property with an Open Bridging Loan

Open bridging loans are suitable for property owners who are looking to release the equity in a residential or commercial property that they own before a sale has been arranged. They can also be used when a sale chain has been broken, i.e. in situations when a property owner has been let down by a buyer who has second thoughts or has found themselves unable to complete an expected purchase owing to unforeseen circumstances.

Unlike a closed bridging loan, which is only required for a short-term, fixed length period, an open bridging loan is not expected to be paid back within a concrete timeframe. The extra flexibility and increased risk factor from the lender’s perspective means that open bridging loan rates are usually a little more expensive than closed bridging loan rates.

When applying for an open bridging loan, it is usually left up to the borrower to decide how much they can afford to pay back and when – with many products offering convenient, open-ended repayment terms. With a closed bridging product, there are numerous fees and late payment charges that will be applicable should the final repayment fall outside the desired window. With an open bridging loan, these additional costs are avoided.

If you are interested in applying for an open bridging loan then please use the Quick Enquiry form provided on this page.

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Closed Bridging Loans

Unlike an open bridging loan, which is a type of loan product that has an open-ended repayment period, closed bridging loans are only appropriate for those with a clear exit strategy. For example, if you have already exchanged contracts and you know that you will receive payment by a certain date, then a closed bridging loan is the most competitive borrowing option based on your circumstances.

Purchasing a New Property with a Closed Bridging Loan

The main difference between an open or closed bridging loan is in the differing repayment options. Whereas an open bridging loan is repaid as and when the client finds that they have the ability to pay, a closed bridging loan is a short-term loan that has a fixed repayment date. If you are looking to release the equity in a property that you own and you have already exchanged contracts then a closed bridging loan can be arranged with the final repayment date matching the date of the completed sale.

Once a contract is set in place, the vast majority of property sales are usually achieved without any major complications and therefore a lender is much more likely to provide secured finance in these situations. If you are planning to renovate or restore a property, or number of properties, by a fixed date, then you can also apply for a closed bridging loan with a view to paying the funds back by means of long-term refinancing once your property, or properties, meet the requirements set by your mortgage provider.

If you would like to find out more about the closed bridging loan products we offer, please complete our online enquiry form and request a call back from a member of our bridging finance team.

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Criteria Per Bridging Loan Type

Residential Bridging Loans

  • Maximum 1st Charge Loan — 75% LTV. This can increase to over 100% with additional security
  • Minimum loan size – £25,001
  • Minimum term — 1 day
  • Maximum term — 12 months. Extensions can be agreed in certain circumstances
  • Interest Rate from 0.49% per month

Commercial Bridging Loans

  • Maximum 1st Charge Loan — 55% LTV. This can increase to over 100% with additional security
  • No minimum loan size
  • Minimum term — 1 day
  • Maximum term — 12 months. Extensions can be agreed in certain circumstances
  • Interest Rate from 1.0% per month

Bridging Loans on Land

  • Maximum 1st Charge Loan — 50% LTV
  • No minimum loan size
  • Minimum term — 1 day
  • Maximum term — 12 months. Extensions can be agreed in certain circumstances
  • Interest Rate from 1.0% per month

***Terms and conditions apply***

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Last Updated: Sep 1, 2017 @ 4:43 pm

2 Nursery Court, Unit 2C, Kibworth Business Park, Harborough Road, Kibworth Harcourt, Leicestershire, LE8 0EX

The advice and processing on all financial products introduced via this website will be handled by UK Property Finance Ltd, which is authorised by The Financial Conduct Authority (FCA) no 667602. The FCA do not regulate all mortgages such as Buy to Let and Commercial. Think Carefully before securing debts against your home. Your property could be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.

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