FAQs


We frequently receive different questions about our bridging loans, development finance, commercial finance and secured loans. Below we have answered a range of commonly asked questions. Should you have a question which has not been answered, please get in touch with us today.

Frequently Asked Questions About Bridging Loans

Bridge loans are short-term property finance products that enable the borrower to complete one property transaction whilst waiting for another to finalise. A bridge loan can be secured against any suitable residential or commercial property, or some other real estate asset such as land.

Depending on the security property, we have no minimum or maximum loan size, although less choice is available with the smallest and largest loans. A typical average bridging loan size is in the region of £150,000.

All bridging loans are secured on commercial or residential property and land. Higher loan to values (known as LTV’s – the size of the loan compared with the value of the security) are in the current climate available on residential properties. Commercial property and land are deemed more risky to the lender and as such a small LTV level is available.

Bridging loan example – if you own a residential property with an open market value of £400,000 and you have a £200,000 mortgage or 1st charge secured against it, we can arrange a maximum 1st charge bridging loan of around £300,000 or 75% LTV. This loan will repay your current mortgage and leave approximately £100,000 which can be used as you require.

Higher LTV’s over 100% are available if additional security is used.

Subject to the enquiry being within normal working hours, we can give an indicative decision over the phone within minutes. We back this up with an email normally within the hour. If you wish to proceed we complete the required finance pack on your behalf and email/post to you, listing our documentary and other requirements. On receipt of the fully completed returned pack and all outstanding information, we process your case through to completion. In reality, the quickest you would normally receive the money is 5 working days however in more complex cases this will take longer.

Certain websites advertise money within hours. A bridging loan, however, follows the same processing route as a mortgage so we believe it is highly unlikely that you will have your money in this time scale.

The credit crunch has made all lenders, quite rightly, take a much more cautious approach to lending. The main concern for any bridging or development finance lender is how and when they will get repaid. Any lender will want a high degree of confidence that if they lend money it will be returned as promised by the borrower.

Examples of repayment routes would be:

  1. Refinance the property for a higher amount than the bridging loan
  2. Sell the property for more than the outstanding bridging loan

If a lender is happy with the exit and security then they should have every reason to lend. Similarly, if they are unhappy with the exit route, they would be highly likely NOT to lend.

We know it is vital that your enquiry is dealt with in a speedy and efficient manner. If your enquiry is urgent and you want to speak to someone out of hours please email us and we will do our utmost to call you immediately.

When it comes to bridging loans, the amount you can borrow will typically depend on both the value and the type of property you are using to secure the finance. If you are applying for an FCA regulated bridging loan that you intend to secure against your main place of residence then most lenders will provide bridge finance up to 70% LTV. If you do not live in the property that you are using to secure the loan then funds up to 75% or 80% loan to value are available. These figures are based on the gross loan amount, which includes all the borrowing fees and interest charges. The net loan amount will be around 5% to 10% lower than this sum.

If you are looking for a bridging loan of up to 100% of the property’s open market value then various options exist, although you will need to provide additional security for your application to be successful. For example, if you were looking to raise funds to purchase a property that cost £250,000 and you needed to borrow the full amount then your bridging loan provider might consider advancing the sum as long as you had another property to offer as collateral. This would need to be a residential or commercial building worth an additional £250,000, which you either own outright or have a small mortgage on.

Here are some example figures:

  • Value of the property you want to buy: £250,000
  • Required bridging loan amount: £260,000
  • Value of additional security: £250,000
  • Outstanding mortgage: £30,000
  • Total security offered (£250,000 + £250,000): £500,000
  • Total amount of loans: £290,000
  • £30,000 (outstanding mortgage) + £260,000 (required loan)

With the above figures in mind, a bridging loan totalling £290,000 is approximately a 58% LTV product, which most lenders would be happy to provide.

However, as far as bridging loans are concerned, the interest charges plus any other applicable fees are not actually repayable until the end of the loan term and this effectively means that the total amount of interest owed increases as the loan progresses. By the time the full amount is due, the cost of borrowing plus any accrued interest will typically result in the final amount being 5% to 10% higher than the original net loan worth.

In some cases, it may be more advantageous to use more than two properties as security against the sum borrowed; particularly as lower LTV products are usually much more affordable with far better rates than higher LTV financing options.

When a lender is calculating the maximum LTV available against the security you are offering, they will normally add the arrangement fee and other costs of borrowing to the net loan amount along with the retained interest you are expected to pay should the loan last for the full extent of the initially agreed term.

Bridge loans are only intended as short-term borrowing products and most bridging lenders will expect the loan to be repaid in full within the agreed timeframe.

One of the first questions your lender will ask is how you intend to settle the debt. This is known as the exit route and if you do not have a feasible exit strategy in place then most lenders will avoid offering bridge finance in the first place. The most common type of exit route usually involves the sale of a property or some type of refinancing option. If you have already exchanged contracts on a property transaction and you are simply waiting to be paid then this is a viable exit strategy that most lenders will find acceptable. If you are trying to secure a long-term financing product in order to pay off your bridge loan then the lender will want to know that your chances of being approved for such finance are reasonable, which means that they will typically perform a credit check in order to ensure they will receive their funds.

Even if you are a responsible borrower with a good credit score, there is still a chance that you may find yourself unable to settle your bridging loan debt at the end of the borrowing term through no fault of your own. In most cases, a lender will contact the borrower around 3 months before the product is due to be repaid in order to determine whether or not you can honour the debt. If it looks like you might not be able to reimburse the lender, they may recommend additional steps that will get you back on track, such as reducing the asking price on a property you are trying to sell on the open market.

Provided you keep in touch with the lender and maintain an open channel of communication, the likelihood of your assets being sold is typically quite low. For this reason, it is always important that you make your bridging finance provider aware of any unexpected financial difficulties as they arise, particularly if you want to retain the assets offered as security.

If you are looking for a quick decision on a bridging loan product and you want to avoid any disruption along the way then it always makes sense to apply for this type of finance at the earliest opportunity – particularly when timing is an important issue.

The general timeframe for most applicants is as follows:

  • Decision to lend – less than 48 hours
  • Formal loan offer – within 2 weeks
  • Loan completion – 2 to 4 weeks – depending on your needs and requirements
Most bridging loans are repaid within 6 to 7 months, although the terms themselves can vary from just 24 hours up to a full year. However, bridging finance can be arranged for a period of 18 months or more, depending on your individual borrowing circumstances.
With bridging finance, the cost of borrowing mainly depends on the LTV percentage, the type of security you are able to offer and your credit rating – among other things. As a leading UK bridge loan broker, we can source the most competitive products on your behalf from a diverse cross-section of lenders offering a variety of financing options that change in accordance with your individual borrowing requirements.
Unlike most mortgages or other secured borrowing products, that vast majority of bridging loans do not have early repayment charges involved. However, if there is a penalty for early repayment, you will be made aware of this upfront whilst applying for a particular product.
With bridging finance, the lender is primarily concerned with the amount of security you can offer and the feasibility of your exit route. As long as you have sufficient equity or collateral to settle the outstanding loan balance if you default, and your exit strategy is acceptable, you should have little trouble in terms of securing bridging finance even if your credit score is somewhat below par.
In certain instances, bridging lenders can provide second charge borrowing products by securing the interest by means of an equitable charge. Such products offer the second charge lender full security without requiring the permission or authority of a first charge lender.
In most cases, a bridging loan lender will require some diminutive type of proof of income although this is not always necessary. As bridging loans are paid back in full at the end of the loan term, there is typically no need to prove your monthly income to a lender, provided you have a viable exit strategy and your assets sufficiently cover the cost of borrowing.
Bridging loans can be used for any purpose the borrower sees fit. However, typical uses include property refurbishment and development, the purchase of a new home whilst waiting for an existing property to sell, the settlement of tax bills and other business-related cash flow problems.
As one of the UK’s leading bridging loan providers, we work closely with a diverse cross-section of mainstream lenders and private investors who are always eager to invest whenever an applicant is able to provide adequate security and a clear exit strategy. As we work with lenders directly, we can ensure your application is processed quickly and efficiently for streamlined results.
Bridging loans are typically secured against property assets such as residential property, commercial real estate and even land or building plots. If a high LTV is required, bridging finance can also be secured against multiple properties / types.
We are a highly versatile bridging loan provider offering specialised borrowing products that are suitable even for those with CCJs, arrears and defaults. Even if you have been declared bankrupt, your chances of approval are still quite high – provided you have appropriate security in the property assets you are using as collateral.
Yes. As an FCA authorised and fully regulated bridging finance provider we are able to provide competitive bridge products secured on either a first or second charge basis. In some cases, we can even offer finance secured on a third charge basis, so long as you have sufficient equity in the property assets you are using as security.
As a leading bridging finance broker, we do not expect our clients to pay any upfront borrowing costs or arrangement fees. However, if you are unable to provide a suitable valuation report then this is the one cost that you may be required to cover.
Once a bridging facility is in place, most providers will charge an arrangement fee, which is only payable once your application is successful. If your application is not successful then you will not be charged an arrangement fee – it is as simple as that. Although we do not charge upfront application fees or any other unexpected costs, you might be required to fund a valuation report. Any other costs such as legal fees and interest charges will typically be added to the overall loan amount if required. These costs are normally repaid at the end of the loan term.
Provided you have sufficient equity left over in your property, and you have not defaulted on the initial bridging loan agreement, you will still have the opportunity of arranging additional finance on top of the original credit facility you have arranged.
Yes. This is a perfectly acceptable practice and any finance you repay earlier than anticipated can be used to reduce the monthly interest charge.
UK Property Finance will never pass your details on to another party or sell them to advertisers or marketing companies.
A closed bridging loan is a short-term borrowing product that has a clear exit strategy in place for the end of the loan term. For example, if you take out a £100,000 bridging loan for a property refurbishment project and you know you will receive the full funds once the project is completed, then you will typically require a closed bridging product.
Open bridging finance refers to a short-term borrowing product that is required when a borrower does not have a clear exit route in place. For example, if you need to raise money to acquire a new home yet you are awaiting the outcome of a different property sale in order to settle the bridge loan then you will typically need to apply for an open bridging loan product. As open bridging loans are somewhat more risky from the lender’s perspective, the approval rates for this type of finance are significantly lower than those for closed bridging products. The actual cost of borrowing is also significantly higher whenever open bridge finance is required.
Mezzanine finance is a useful type of loan product that bridges the gap between the amount required by a developer to complete a project and the amount they have managed to secure from a principle loan provider. If you are a property developer who has already raised sufficient finance to fund 75% of a project, a mezzanine funder can be used to provide the additional 25% of funds required to get your project completed.

Bridging loans and development finance products are quite similar in several respects. However, whereas bridging finance is typically only required for 1 day to 12 months, development finance can be secured for up to 3 years or more. The main difference between bridging loans and development finance is that bridging loan funds are usually sourced, approved and released in full at the start of the loan term, whilst development finance is normally released in increments, as various stages of completion are reached in a development project.

If you are a property developer, development finance can work out cheaper than bridging loan borrowing although the lender will want to know that you are capable of completing the task in hand if you are to take advantage of the most competitive interest rates available.

Most bridging loans are usually up to 12 months in length but can be extended in certain circumstances. Interest payable during the term of the loan is usually rolled up and repaid at the end when the loan is repaid i.e. if you borrow £100,000 and generate £5,000 of interest; £105,000 is repaid to the bridging lender, when you repay the loan.

As industry leading providers of bespoke finance solutions, the team at UK Property Finance can arrange tailor-made short term property lending facilities for all types of property development and refurbishment projects. Whether you are looking at a new build residential or commercial property loan, or taking on a refurbishment project, we will use our expertise to source the most appropriate funder for your short term property needs. If you simply need bridging finance solutions then we can provide that too.

Every property development loan is by definition different and we spend time to understand the key requirements of the deal before identifying the funder which best meets your requirements the cost of the loan is only one factor, we also look at the overall amount of the loan, availability of drawdowns, whether the lender can meet your deadlines etc. We also look at your experience in the market as this will be a large factor in determining which lender we recommend some providers of residential and commercial property loans require experience, some don't but don't worry, we will ensure we choose the right one and will be there with you throughout the process to ensure you get the loan drawdown.

We cover the whole of the market from the High Street banks through to specialist development funders. We have good knowledge of the requirements of each lender so whether you are looking for property refurbishment finance or housing development finance, our short term property finance team will be on hand to ensure that raising finance for property development is handled professionally and promptly so you get the funding you are looking for.

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Frequently Asked Questions About Development Finance

It can be used to improve a property or to build a new structure.
We aim to secure a funding which incurs no exit fees.
Yes, funding is secured against the property value.
No, the interest is rolled up throughout the agreed term of the loan.
You are only charged interest for the amount of time you take out the loan.
No, the loan is secured against bricks and mortar only i.e. the value of the property if it is empty.
No. We lend on residential, semi-commercial and commercial properties and land regardless of the construction, type or use.
Usually within a few days of receiving all documentation.
A feasibility study of your development would be required.
When the development can demonstrate a profit i.e. increased value or when it can provide a revenue stream e.g. tenants rental payments.
No. It refers to an individual looking to build a property from the ground up and subsequently live in it.
No. However, we recommend customers seek independent legal advice prior to completion.
These are staged payments made against works carried out on the property.
Drawdowns can vary from project to project but are usually released as follows:
  • Land value – an initial draw down against either the purchase cost or the value of the land (if already owned).
  • Initial costs including the footings and foundations.
  • Wall plate which is the basic external structure of the project.
  • Wind and water tight which primarily means the windows and the roof.
  • 1st fix which includes the plastering and the initial installation of the electrics.
  • 2nd fix to complete the electrics and any finishing work required such as painting and decorating, landscaping etc.
The FCA do not regulate all mortgages such as Buy to Let and Commercial. UK Property Finance Ltd is authorised by The Financial Conduct Authority (FCA) no 667602.

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Frequently Asked Questions About Commercial Finance

All types and sectors including:
  • Freehold and leasehold purchase
  • Investment finance
  • Development finance
  • Bridging finance
  • Business finance
  • Factoring
  • Leasing
  • Trade Finance
  • Venture Finance
  • Turnaround Finance
  • Asset Finance
We are commercial brokers and packagers. Our staff have many years of experience raising commercial finance. Access Commercial Finance has an extensive lender panel. We are a business dedicated to helping applicants raise commercial finance.
Yes, UK Property Finance is authorised and regulated by the Financial Conduct Authority, Firm Reference Number 667602.

We have a core panel of over 80 lenders from Prime Lending to Sub Prime Lending we can consider all circumstances, and because we lend our own funds † as well we can find solutions for circumstances that other brokers may not be able to accommodate.

† Only for non-regulated business loans.

Our rates depend on your circumstances at the time. We will provide you with the best solution to suit your needs.
The more information you can provide us about your business the better. It may mean we’ll be able to offer you a lower rate of interest, comparable with that of the high street lenders.
We can lend you any sum between £26k and £10m, depending on the property and your circumstances.
When a business needs to access the funds tied in with the equity in an asset, or multiple assets, such as an expensive machine, or a fleet of vehicles, then this is known as asset refinancing. Although most funds raised in this way are typically secured against assets that a company owns outright, asset refinance can also be arranged on assets that are still on finance – as long as the existing debt is repaid with the new credit arrangement. If you are thinking of securing credit against the equity in your business assets then it is important to ensure that the items you are using as collateral for the loan are easily identifiable by means of a unique registration mark or serial code.
A buy-to-let mortgage is specialist type of property finance designed for landlords and property investors. Unlike residential mortgages, which are aimed at homeowners looking to purchase their own properties, Buy-to-let mortgages are secured against rental properties and they are useful for the buying and refinancing of houses, flats and multiple tenant properties. When you apply for a buy-to-let mortgage, your provider will base the decision to lend on the rental income that the property is expected to generate.
A let to buy mortgage is somewhat different to a buy-to-let facility in that let to buy mortgages are specifically aimed at homeowners and mortgage holders who are looking to move out of a property with the intention of renting it out as a secondary source of income. If you are looking to raise the required funds to purchase a new home whilst keeping hold of your existing property as an investment opportunity then a let to buy mortgage is the perfect solution. With the housing market experiencing something of a slump at the moment, many homeowners are turning to let to buy as a means of holding on to their existing homes until property prices pick up again, with a view to maximizing return on their initial investments.

The London Interbank Offered Rate, or LIBOR, is a useful lending tool used by mainstream lenders and banks in order to determine the rate of interest across popular borrowing products such as mortgages and other secured finance facilities. LIBOR rates themselves are used when one bank lends surplus money to another and they are updated daily at approximately 11.45am (UTC) by the British Bankers Association, in a list of 10 different currencies and across 15 different borrowing periods ranging from 24 hours up to a year.

The LIBOR rate is the average interest rate charged by a large cross-section of banks that lend money to each other and it is a useful tool for banks and building societies looking to make a profit from their surplus cash, or save money whilst acquiring additional funds in order to boost their reserves.

The vast majority of lenders use the LIBOR rate as a means of fixing the cost of their own borrowing products. These rates are typically expressed as a fixed percentage that is set slightly higher than the Bank of England Base Rate or as the 3 month Libor rate itself. Whether you are saving money or applying for finance, the LIBOR interest rate has a dramatic effect on the cost of both – which is why so many professionals and consumers watch the rate so closely.

The 3 month LIBOR rate has recently been quite high, mainly owing to the unpredictable nature of the market place, which has meant that many banks have become far more reluctant to lend to each other. Whenever the demand for money is high, the knock on effect is an increase in the LIBOR rate. However, the good news is that the 3-month LIBOR rate has started to fall significantly – which is great news for anyone in search of a mortgage or any other type of secured borrowing product.

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Frequently Asked Questions About Secured Loans

A secured loan is a financial product that is secured against a property. As most borrowers use their home as security, secured loans are also referred to as homeowner loans. From the lender’s perspective, the risk involved is much lower than unsecured loan products, which is why secured loans often have much lower interest rates. The chances of being approved and accepted for a secured loan are typically quite high, although your home may be at risk if you fail to make the repayments on time.
If you are a UK homeowner and you own your property outright or you have sufficient equity in your property then you can apply online for a secured loan now!
The process of applying for a secured loan using our website is very quick indeed. We offer a highly streamlined service, which means that the money you need could be in your account in a matter of days. As no two cases are the same and everybody has different needs, you should talk to one of our advisors who will provide you with an accurate time-frame based on your individual borrowing requirements.
Most of the lenders we work with have an early repayment charge that equates to eight weeks’ interest on the outstanding balance at the time you wish to settle. However, the actual rates will vary considerably – depending on the terms and conditions set out in the credit agreement. If you are planning to pay your secured loan off early then let us know in advance and we will find you an appropriate finance product that allows for this.
You can use a secured loan for anything at all. Debt consolidation, holidays, a new car or home improvements are all valid reasons for taking out a homeowner loan.
Most unsecured loans are taken out over a period that extends no longer than five years. However, with a secured loan you can spread the repayments over a period lasting anywhere between 5 and 30 years! Of course, the longer the repayment terms – the more you end up paying back – although the monthly amount will obviously be lower.
When you apply for a homeowner loan using our services, we perform a quick check to verify the details you have provided us with and this does show up on your credit file – albeit with no adverse effect. Other lenders should not be able to see this information. If you are approved for finance and you accept the loan then this will be registered on your file and the information will be available to anyone else looking at your credit history.
Loan to Value is an expression that is used by mortgage lenders to determine the value of a loan in relation to the actual amount a property is worth. For example, if your home was worth £200,000 and you applied for a secured loan worth £150,000 – the loan would be 75% LTV.
A variable rate is an interest rate linked to other rates that fluctuate over time – such as the Bank of England Base Rate. Unlike fixed rates, variable rates are usually much cheaper in the short term – but they are not guaranteed to stay low. If the Bank of England raises the interest rate and you have a variable rate loan, your monthly repayments could increase a considerable amount.
A consolidation loan is a secured borrowing product that is used to reduce the number of monthly repayments a debtor must make, whilst also lowering the payment amount itself. Consolidation loans are a useful tool for lowering the cost of high interest products such as credit or store cards and dealing with other unsecured debts such as hire purchase agreements and other expensive loan facilities. When taking out a consolidation loan, it is important to remember that although a longer repayment term will lower the amount you pay back each month, you will ultimately pay back a lot more in terms of the actual interest you are charged.
If you are looking for a quick decision on a secured loan product then you will be glad to know that we can usually provide an answer, in principal, within 15 to 20 minutes after receiving the initial application. On top of this, we will also be able to give you additional information such as the available repayment options, rate of interest you can expect to pay and details of any other costs involved.

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Page Last Updated: Sep 1, 2017 @ 4:01 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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