The UK’s housing market continues to go from strength to strength, proving a blessing for some and a curse for others. Disparities between supply and demand are growing, with the average estate agents’ branch now having just 22 properties available for purchase. 

By contrast, estate agents currently have an average of 84 registered buyers, prompting ferocious competition among interested bidders.

Meanwhile, the number of cash buyers purchasing homes outright has increased significantly.  According to the latest data published by Hamptons, a full 73% of home purchases in 2022 so far took place ‘chain free’. Back in 2010, the figure stood at just 65% when becoming part of a property chain was not seen as such a risk.

Commenting on the findings, Hamptons said that the more competitive things become on the housing market, the greater the appeal of becoming a cash buyer.  Traditionally, the ability to purchase a home outright has been reserved for those with significant on-hand cash reserves.

The appeal of chain-breaking

The biggest benefit of avoiding conventional property chains is removing reliance on other buyers and sellers. If you have the cash available to purchase your next home outright, it doesn’t matter whether you have found the right buyer for your home.

You can purchase your next home for cash, leave your previous home on the market and wait for it to sell for its full market value. The opposite is to move only after agreeing on a sale on your current home, which means becoming part of a long and potentially fragile property chain.

In addition, estate agents report that properties purchased chain-free are almost always offered at preferential rates. On average, it can cost around 2.5% less to purchase a property as a cash buyer, than via conventional channels.

It is therefore understandable why more prospective movers than ever before are looking into the available options for going chain-free. One of which is bridging finance, opening the possibility of cash property purchases up to a much broader audience.

Bridging finance for chain-free home purchases

A competitive bridging loan can empower movers with the flexibility traditionally enjoyed only by comparatively wealthy cash buyers. The simple fact of the matter is that most homebuyers simply do not have massive sums of cash in reserve, sufficient to purchase their next property outright.

Bridging finance is issued in the form of a secured loan, similar to a mortgage. The applicant’s home is used as security for the loan and the amount they can borrow is based on their equity level.

For example, a homeowner with a property valued at £400,000 could take out a £300,000 bridging loan with an LTV of 80%. If the same homeowner had only paid off 50% of their mortgage, they would have £200,000 equity and could therefore borrow £150,000 at 80% LTV.

Importantly, the funds raised with a bridging loan can be accessed much faster than those associated with a conventional mortgage or home loan. With all the required paperwork and evidence in place, the facility can be arranged and accessed in just a few working days.

This gives prospective buyers with sufficient equity in their current home the opportunity to buy their next home outright, beating competing bidders to the punch.

Cost-effective property purchase loans

As mentioned above, vendors are often willing to accept lower prices for their properties from chain-free bidders, typically around 2.5%. In addition, relocating with bridging finance negates the need to rush through the sale of your own home and perhaps agree to a price you are not fully happy with.

After buying a new home with a bridging loan, the buyer’s previous home can be left on the market for as long as it takes to sell it for the best possible price.  In the meantime, interest accrues at a rate as low as 0.5%, adding up to a hugely cost-effective facility.

Best of all, the flexibility of bridging finance opens competitive short-term funding up to the broadest possible audience. Even with a poor credit rating or a history of bankruptcy, it is still possible to qualify for a competitive deal.

For more information on the benefits of buying a home chain-free or to discuss any aspect of bridging finance in more detail, contact a member of the team at UK Property Finance today.

When looking for quick finance at great interest rates, many borrowers opt for a bridging loan due to the speed at which they can be arranged and the flexibility this type of funding offers.

But are there areas in the UK where securing bridging finance is easier than in other parts? We will be looking at the different regions of the UK to see where you are more likely to be accepted for a bridging loan and where it may prove to be more problematic. We will also see how likely it is that lenders will allow prospective buyers to use bridging finance to buy property overseas.

Generally speaking, bridging loans are available in all regions of the UK; however, some lenders will place restrictions and different rules on some areas, including London, Scotland, and Northern Ireland.

Bridging loans in London

Like other major cities in England, such as Manchester, Liverpool, and Birmingham, bridging finance is readily available in London from a multitude of lenders. As there are many bridging loan lenders operating from the capital, borrowers in this area looking for great deals are literally spoilt for choice.

To get the best rates in London and for advice on which bridging finance products best suit your requirements, it is vital that you employ the services of an experienced broker who specialises in London bridging loans. Bridging loan brokers will also have access to lenders that the public does not have, giving a wider choice of options.

Typically, lenders in the UK will cap the LTV at 70%–75% for low-risk deals, which generally applies across England. Most lenders will, however, significantly reduce this figure to between 50% and 65% for high-risk deals. This means that prospective bridging loan borrowers will need to find a 50% to 35% deposit, which can add up to a huge amount of money.

There are lenders that offer 100% LTV, but these are few and far between, and typically there will need to be additional security in the form of other acceptable assets or property, which may result in extra valuation fees.

No matter where you live in England, the key to getting the best bridging loan rates is simply offering the lender the lowest risk factor. So whether you are in Blackpool, Newcastle, or London, you will be assessed on how well you meet the approval criteria.

Each application will be assessed on an individual basis to ensure the borrower meets the lender’s eligibility requirements.

To be successfully accepted, you will need to look at the following:

• A viable exit strategy: An exit strategy is the way a borrower intends to repay the loan at the end of the loan term. No lender will even consider a bridging finance applicant without a strong and workable exit strategy.
  
  When a bridging loan is used for a property purchase, upgrade, or renovation, the typical method of repayment is usually a long-term mortgage product or the sale of the property. The mortgage (or remortgage) or profit from the sale will be used to repay the loan in full. For this reason, it is vital that the lender have confidence in the borrower’s ability to meet this obligation, so you will need to present a realistic exit strategy for the lender to approve your application.

• Experienced in property development: Although experience in property investment and development is not necessarily needed to be accepted for bridging finance, lenders will be more inclined to lend to borrowers who have a proven track record in this area. That’s not to say that lenders will not consider first-time investors, as there are many lenders who specialise in bringing new investors onto the market, but it definitely helps if you have a history of meeting bridging loan repayment obligations.
  
  Lenders may ask for evidence of past projects to ensure that they have been successful prior to approving any application.

• Location: Another factor that will likely be closely looked at is the location of the development or upgrade. The local property market will be taken into account to calculate the viability of selling at a profit and how long it will take to sell. Things such as local schools, transport, and road links will be taken into account when assessing the possible profitability of the project.

• Financial history: As a bridging loan is a type of secured loan, having a perfect credit history is not necessarily a dealbreaker when applying for funding. If your exit strategy is well-thought-out and realistic, then most lenders will consider you, provided that you have sufficient security to cover the loan. However, when it comes to getting the best interest rates and bridging loan deals, borrowers with a clean credit history are more likely to be considered first.
  
  Some lenders will not consider those with bad credit histories, particularly those looking to repay with a mortgage product, or will only offer deals with higher rates due to the increased risk.

Bridging loans in Scotland

If you are looking to finance a project north of the border, you may have to look at specialist lenders, as many lenders will not consider bridging finance in Scotland.

For those that will, there will most certainly be additional restrictions on particular postcode areas. So, for example, it will be more of a struggle to find a lender willing to fund a development in the Scottish Highlands than it would be to be approved for funding for a project in Glasgow.

Lending criteria, rates, and LTV on the Scottish mainland will be comparable to those available in England unless the development has additional complexities, which will most likely affect LTV rates. Land purchases, in particular, are riskier and therefore may have a higher LTV than other projects.

Utilising the services of a specialist bridging loan broker will help you access as many lenders who cover Scotland as possible. Due to the limited number of lenders available who are willing to do this, it is vital that you use a ‘whole of market’ broker to give you the best chance of acceptance. It is especially important to seek advice if you have a history of bad credit.

Bridging loans in Northern Ireland

Much like in Scotland, getting a bridging loan in Northern Ireland can be more problematic as there will be similar restrictions. This is primarily due to the lack of lenders willing to approve projects and developments in this region of the UK. Again, certain postcodes will be excluded as not viable, and you will more than likely be rejected for remote areas as opposed to larger towns and cities.

One way of increasing your chances of finding a lender will be to look at unregulated bridging finance, but it is imperative that you seek professional advice before you apply for this type of loan. You will need to find a ‘Whole of Market’ broker in order to access as many lenders as possible and get the best deal possible.

Bridging finance for overseas properties

It is not impossible to arrange bridging finance for overseas property, but you may struggle to find a lender willing to do this. However, there are a few who will, but they are typically accessed through a specialist broker.

Most lenders will require a substantial asset for security. For example, you could use your UK property as collateral for bridging finance for a property you would like to buy in Australia. The bridging loan could then be repaid using an international mortgage product from a lender who specialises in foreign property purchases or the sale of your UK property, investments, and endowments of inheritance. There will need to be a strong exit strategy for a bridging loan for overseas property in order to be accepted by any lender.

Bridging loans for overseas buy-to-let

There are a limited number of specialist lenders who will allow funds to be approved for borrowers looking to buy property abroad with the sole intention of letting them out. As with most buy-to-let investments, the LTV will usually be around 75% at the most, and the valuation of the property will be important to achieving acceptance.

Bridging loans overseas for limited companies

Bridging finance to fund property purchases outside the UK is not limited to individuals but can also be accessed by limited liability companies. There are specialist lenders who will consider applications, provided the eligibility criteria are met. This type of loan is treated similarly to an overseas buy-to-let, but personal guarantees by the company directors may be required. Although not always needed, an SPV (special purpose vehicle) could improve your chances and get you a better deal.

Most property developers and construction companies seek outside support to fund their projects and initiatives. Along with specialist development finance, bridging loans for property development are a popular option for investors.

As the name suggests, a bridging loan for property development is a specialist form of bridging finance issued to cover the costs of large-scale development and construction projects. Whereas development finance is released in a series of instalments as the project progresses, a bridging loan is transferred to the borrower in a single lump-sum payment.

Bridging finance for property development is typically issued for a term of six to 18 months and is a strictly short-term facility.

But in what kinds of scenarios would it be advisable to refinance a bridging loan for property development? If you are unable to repay your bridging loan on time or would like to extend the repayment term, what kind of options are available to you?

When refinancing is your best option

Refinancing can provide developers and investors with welcome breathing room in a wide range of situations. If your current bridging loan term is coming to an end, you need to think carefully about how you will repay the loan.

The most common exit strategy among developers and investors is the sale of the development upon its completion. After which, the proceeds are used to repay the loan, and the remaining profits are retained.

But there is also the option to refinance a bridging loan, which involves transitioning the loan onto a longer-term agreement. For example, a commercial mortgage could be taken out to repay the bridging loan before being repaid gradually over the course of several years.

As for when this would be appropriate, there are several scenarios where refinancing may be the best option:

• To allow more time to sell the development: It is always possible that, due to unforeseen circumstances, a viable buyer for the development may not have been found by the time the initial loan term comes to an end. Or perhaps the buyer who was lined up to buy the development pulled out of the deal at the last moment.
• If the developer decides to retain the asset: It could also simply be that the developer comes to the conclusion that it would be more profitable to retain the asset instead of selling it. By refinancing the loan, the outstanding balance can be repaid long-term while the development is let out, generating ongoing revenue.
• Where the project exceeds its estimated timeframe: Extensive and ambitious property development projects routinely overrun their estimated timeframes. This could present a scenario where the agreed loan term has expired, but the development is not nearly ready to be sold to a viable buyer.

Whether you are planning ahead or looking to refinance a property development loan at short notice, the help and support of an experienced broker could prove invaluable. A bridging loan for property development can be refinanced using a variety of short- and long-term products, from which your broker will help you select the most appropriate facility.

Whether you are planning to put your home up for sale or you are simply looking to improve it for your benefit, getting the best return on your investment is always a priority.

But which residential renovations add the most value to a home, over and above the costs of the project? If you are looking to maximise your home’s market value, which renovations should you be setting your sights on?

A word on property type and location

Before getting started, it is worth noting how the ROI on any given renovation may be different from one part of the country to the next. For example, data from the Federation of Master Builders (FMB) indicates that while adding an en-suite bathroom to a bedroom in London could add around £15,000 to the property’s value, the same project in the northeast of England would contribute £2,000.

Before performing any major refurbishments, consult with a reputable local construction firm for their advice and recommendations.

Loft and garage conversions

One of the most popular (and profitable) ways to add value to a home is to convert a garage or loft into a fully functional living space. Research suggests that while a quality loft conversion can add as much as 15% to a property’s value, a garage conversion can contribute as much as 20%.

While both projects are fairly extensive in nature, they can also be surprisingly affordable. A simple loft conversion can be conducted for around £10,000 and up, whereas a garage can be converted for as little as £5,000.

Energy efficiency improvements

Homebuyers are placing greater emphasis on energy efficiency than ever before. As a result, energy-efficient home improvements can add significant value and appeal to any type of property. Smaller projects like adding cavity wall insulation and higher-quality loft insulation can be covered with no more than around £1,000. Fitting an energy-efficient boiler coupled with a smart thermostat could add a price closer to £3,000, while the installation of high-efficiency double glazing could cost £5,000 or more.

Either way, research from the UK government suggests that energy-efficient home improvements can contribute anything from 15% to 35% extra to a home’s value. Irrespective of the costs of the renovations, the ROI could be huge.

External improvements and landscaping

First impressions are everything when looking to get the best possible price for a property. Oftentimes, prospective buyers have made their decision long before setting foot through the door. An attractive exterior is so important that some studies suggest a well-kept garden can add up to 20% to the value of a residential property.

Landscaped gardens with private recreation spaces and plenty of decorative plants can be particularly profitable when selling a home. The installation of good garden lighting can also make a major difference, particularly when presenting your home to prospective buyers at night. Importantly, a garden that looks relatively straightforward to keep well-maintained is essential. A garden that will be a full-time job to tend to is never particularly attractive.

Kitchen and bathroom upgrades

Kitchens and bathrooms tend to be scrutinised particularly heavily by prospective homebuyers. A complete kitchen renovation can generate a generous ROI, but so too can replacing things like worktops, cabinet doors, and appliances. If it is an option, creating an open-plan living and dining space by removing an internal wall is worth considering. Some estimates suggest that while the project may cost around £5,000, it has the potential to add up to £50,000 to a home’s market value. Installing an en-suite bathroom also guarantees a decent ROI, typically up to a maximum of a 5% property value increase.

They say time waits for no one, so why run the risk of being beaten to the punch by a rival bidder?

Our short-term bridging loans are ideal for those who know that the best deals are never around for long. Whether you are looking to capitalise on a lucrative investment opportunity or simply buy your dream home before it is gone for good, a short-term bridging loan could be just the thing.

Why choose a short-term bridging loan?

When time is a factor and waiting weeks for approval is not an option, short-term bridging loans provide a fast-access alternative to conventional high-street loans.

• A bridging loan can be secured against almost any type of property or other asset of value, such as land, industrial equipment, and more.
• Poor credit applicants are welcomed by many bridging specialists, often with no proof of income required.
• Bridging finance applications can be approved in principle within 24 hours, and the funds are often accessible within a few working days.
• Every bridging loan is a bespoke contract created from scratch, reflecting the preferences, requirements, and budgets of the borrower.

When may a short-term bridging loan be used?

Short-term bridging finance can be used for any legal requirement whatsoever, with none of the usual exceptions.

Popular uses for bridging loans include the following:

• Purchasing properties at auction.
• Bridging gaps between property purchases and sales.
• Funding light and heavy refurbishments.
• Purchasing properties that cannot be mortgaged.
• Raising business capital quickly and affordably.
• Conducting home improvements prior to selling.

What is a short-term bridging loan?

A bridging loan is a specialist type of short-term secured loan that can be arranged and accessed much faster than any conventional loan or mortgage. Bridging finance can be arranged for anything from £10,000 to £10 million or more, with monthly interest rates as low as 0.5% or less.

Repaid a few months after being issued, bridging finance can be uniquely cost-effective as a strictly short-term facility.

Who can qualify for a bridging loan?

Bridging loans are issued primarily on the basis of the value of the assets used to cover the costs of the loan and the capacity of the applicant to repay the loan on time.

If these two main requirements are fulfilled, anyone (including limited companies and individuals) can apply for a bridging loan, even with adverse credit and/or no proof of income.

When is a short-term bridging loan better?

A bridging loan can be just the thing when a considerable amount of capital is needed as quickly as possible and can be repaid in full a few months later.

Instances where a short-term bridging loan could be better than a conventional loan include the following:

• When a homeowner or investor would like to purchase a property before the sale of their existing property has been completed, they effectively ‘bridge’ this common gap.
• purchasing properties at auction at prices significantly lower than their market value, which requires payment of the full outstanding balance within 28 days.
• Buying a derelict, rundown, or uninhabitable property is considered not mortgageable by mainstream lenders, whereas traditional loans and mortgages are unsuitable.
• individuals or business applicants with poor credit or no formal proof of income who would not be considered eligible for a loan or mortgage on the High Street

We work hard to help every client access an unbeatable deal from any top-rated UK lender. Whether you are ready to go ahead or simply considering a bridging loan application, we are standing by to take your call.

A bridging loan is a form of short-term loan taken out against one’s property.

Bridging finance is suitable for solving a variety of short-term funding needs, such as:

• Property purchases before selling one’s current home.
• Chain breaks.
• Downsizing.
• Rejections due to adverse credit or low income.
• Properties where a mortgage is not possible.
• 2nd-charge purchases.
• Investment properties.

Bridge loans can be taken out for up to 12 months on regulated bridging loans or from 18 to 36 months on unregulated bridging loans.

A regulated bridging loan is a loan secured against one’s current property; it could be a property you have lived in or intend to live in. The maximum term for a regulated loan is 12 months. The maximum loan-to-value is up to 75%.

An unregulated bridging loan is on properties where you have no intentions of living, e.g., buying a property that you intend to refurbish or convert, then sell on or rent out. An unregulated loan can last up to 36 months. The maximum loan-to-value is 75%.

Key features of the bridging loans we offer

You are not tied to the term of the loan and can exit the loan as soon as the exit route becomes viable, for example, if the property sells.

There are no penalties for repaying early.

After the first month, interest is calculated daily, and you only pay interest up to the day that you use the facility. For example, if you keep the loan for 7 months and 5 days, that’s all you would pay for.

You are usually not required to make any monthly payments, and interest is compounded or rolled over. You pay the whole amount (the amount borrowed plus accrued interest) at the end of the term or when you repay the loan.

Unlike a mortgage, which can be repaid over a fixed term, bridging loans need a fixed exit at the start of the loan, for example, the sale of your current property, the sale of refurbished or converted property, or refinancing it with a buy-to-let mortgage or development finance.

Bridging loans are increasingly being used for development purposes such as refurbishments, conversions, and extensions. There are quite a few possibilities when borrowing for development purposes. For example, one may purchase a house with plans to convert it into two houses, or they could extend it to the top or side. The lenders will view this as heavy refurbishment and will allow you to purchase the property, do the work, and either sell or let that property.

Alternatively, you could be purchasing a property at auction that might need a new kitchen, bathroom, floors, and decoration. The lender will view it as part of their standard or light refurbishment bridging loan. Once again, the lender will allow you to purchase the property, carry out the required work, and either sell or let that property.

Similarly, you may want to purchase a property with planning permission for an extension. You need funds for the purchase cost as well as the full renovation costs. The extension can be no more than 50% of the existing property. The lender will give you between 50 and 60% of the purchase price towards the purchase and 100% of the build cost, provided it is within 65% of the final value (GDV, gross domestic value).

You could also use equity in another property as collateral (this could be on a first- or second-charge basis) and release more funds towards the purchase, the development, or both.

There are numerous possibilities where one could borrow bridging loans for development finance, such as:

• Finishing off wind and water-tight properties.
• Conversion of a single unit into multiple units.
• Conversion of multiple units into a single.
• Conversion of commercial properties into residential.
• Property requiring a change of use.
• Funds can be available in drawdowns or stage payments.

Please note that the rates will vary according to the loan value and the work involved.

As everyone’s circumstances vary, the decision to borrow any money must be made after careful consideration. Please note that your property can be at risk of being repossessed if the loan is not repaid within the agreed-upon time frame.

Bridging loans are a uniquely flexible short-term facility secured against eligible assets or property and issued at competitive rates. Unlike conventional loans or mortgages, poor credit bridging loans are widely available for applicants with an imperfect credit history.

Bad credit bridging loans work in exactly the same way as their conventional counterparts. Importantly, adverse credit-bridging loans can be arranged with equally competitive interest rates and borrowing costs.

With bridging finance, what matters most to the lender is the applicant’s capacity to offer viable assets to cover the costs of the loan and repay the balance in full at a later date. If you can present a convincing case and own assets of high enough value to secure the loan, you have a strong chance of qualifying for a bridging loan, irrespective of the kind of adverse credit issues that would normally count you out of the running on the high street.

Should I use a specialist poor credit bridging loans broker?

Seeking support from a broker with extensive experience in poor credit bridging loans is essential. This is for two reasons, the first of which is the importance of presenting a credible and convincing application. Your broker will provide you with the complete support you need to maximise your likelihood of qualifying for a competitive loan.

Secondly, many of the market’s best bridging lenders offer their services exclusively via broker introductions. This means that the only way to gain access to the services they provide is with the help of an experienced broker.

Can I get a bridging loan with no credit check?

Generally speaking, the answer is no; all bridging finance applications include a mandatory credit check as standard. But this is not the same ‘yes or no’ credit check conducted by traditional banks when processing loan applications.

Nor does this credit check have to leave a mark of any kind on your credit report; your broker can ensure a soft credit check is performed to preserve your credit score.

Adverse credit need not be an issue if you pass the main eligibility checks for bridging finance: acceptable assets to secure the loan and a viable exit strategy.

In all instances, your broker will provide the advice and support you need to present a convincing case to the market’s most accommodating lenders.

Over the last twelve months, we have seen a growing number of investors and developers utilise bridging finance to finance their property investments.

The finance market is well-equipped to deal with complex situations and has developed many specialist products to help find the perfect solution for any individual requiring flexibility.

Growing in popularity due to the relaxation of planning laws is the conversion of commercial properties to residential properties. As a solution to the increasing demand for housing and the closure of many businesses due to the pandemic, these conversions are providing great investment opportunities for developers. The deregulation has resulted in a far simpler and more cost-effective planning approval process, leading to many investors and developers cashing in on this new method of creating housing.

Not only are developers benefiting, but towns and cities are experiencing much-needed regeneration after the devastating effect of the pandemic on the UK economy.

The COVID lockdowns led to many businesses being forced to trade online, creating a situation where shops and other business premises were left vacant. The most affected have most definitely been the hospitality industry as well as retail and small businesses. With a huge proportion of the population being forced to work from home, the need for work premises has been greatly reduced. Business structures have changed, with many employers allowing their staff to continue to work from home on a full-time or part-time basis, thereby negating the need for workspace.

The conversion of commercial to residential is somewhat reviving the high street and attracting people back to cities and towns, particularly the young looking to get their foot onto the property market and enjoy the benefits of living in a city.

The advantage of commercial property is that it is often situated in prime locations with excellent access to bars, restaurants, transport links, job opportunities, and other attractive amenities. Many commercial buildings are on the market at extremely competitive prices; therefore, securing a good deal for a developer can lead to a very lucrative investment with the potential to generate significant capital growth.

When it comes to funding, developers and investors are turning to bridging finance. In direct reaction, many lenders are now offering specialised bridging loans in order to meet this new demand.

The most important factor for developers and investors to consider is to make sure they have properly been advised and had prior approval before they commit to the project. Once this has been done, bridging finance can then be utilised to secure the required funds to ensure the project reaches full completion.

A bridging loan is short-term finance that can be arranged quite quickly, often within days, so that buyers can take advantage of access to funds in a timely fashion.