With an ever-increasing number of commercial developers, buy-to-let landlords, and other UK property investors turning to bridge loan providers for fast and flexible financing options, one of the country’s most reputable brokers has recently introduced a new online tool that is designed to give a clear picture of the overall value and affordability of any given borrowing product. With the new bridging loan calculator on the Bridgingloans.co.uk website, potential borrowers are able to see in an instant just how much a secured short-term loan will cost, including the amount of interest they can expect to pay and any additional fees.

Initially devised as a short-term finance product that serves as a necessary and convenient bridge between two property transactions that may otherwise prove impossible to fund, bridging loans are completely unrivalled in terms of the speed at which they can be arranged, repayment flexibility, and the low cost of borrowing they provide. With the new bridge loan calculator provided at Bridgingloans.co.uk, working out the precise cost of taking out such a loan has never been easier, and the tool can be used without any obligation to apply.

Quick and intelligent finance

“Over the last couple of years, the team at bridgingloans.co.uk has come to realise that the vast majority of first-time bridge finance borrowers want nothing more than to check the figures in order to see just how viable this type of short-term loan product can be. Although bridging loans are a less common type of finance in comparison with residential or commercial remortgaging products, they are relatively simple to understand and much easier to apply for. However, many people are unfamiliar with the borrowing terms and how the fees and interest rates are worked out, which is why we introduced our quick and easy free online bridging loan calculator tool.”

The main difference with bridging loans and most other types of secured mortgage products is the length of time that funds are required. A mortgage, whether taken out for residential or commercial purposes, will typically be repaid over a 10, 15, or even 25-year period, whereas a bridging loan will usually be paid back within 12 months or less.

With a mortgage, the interest is calculated and charged annually, and the cost of borrowing can be tremendously high if the repayments are spread over many years. However, with bridging finance, the money is repaid much more quickly, which means the amount of interest a borrower can expect to pay is significantly lower.

Working out the cost of borrowing

“If you are thinking of applying for a bridging product, then our user-friendly online loan calculator will provide a quick and reliable insight into how much everything will cost. Unlike a residential or commercial mortgage, repayments are not usually made on a month-by-month basis. Rather, the borrower receives a net sum, which is typically paid back in full at the end of the loan term with any interest charges and additional fees rolled up and added to the remaining balance. Please note that when using our online bridging loan calculator, the maximum LTV amount is 75%. If you need to borrow more than this, then you will need to contact one of our brokers for an accurate cost.”

Bridgingloans.co.uk is a fully regulated, independent bridging specialist with full market access and the ability to source additional funds from an exclusive panel of lenders who will consider any application based on its own merits. In certain instances, Bridgingloans.co.uk can also act as a principal lender if deemed necessary. All products are competitively sourced in order to provide the lowest possible interest charges and the least significant fees.

Whether you are looking to buy a new home or business property, invest in a buy-to-let venture, or cover the cost of urgent repair or refurbishment work, Bridgingloans.co.uk can save you time and money with a fast, reliable, intelligent, and affordable borrowing solution.

Recently, we were approached by a business introducer who was trying to raise funds for an experienced Scottish property developer who, in turn, was struggling to find a competitive short-term finance deal so that he could realise a lucrative build development project.

The developer had already purchased the land and had also been given the green light in terms of planning permission, yet he found himself unable to obtain the additional (and not insignificant) funds needed to finance the building itself.

Owing to the vast scale of the project and the high loan-to-cost ratio, many bridging lenders were unwilling to consider the application, especially as an existing bridging loan, which was used to purchase the land, was nearing the redemption stage.

This meant that the developer faced the highly probabilistic reality of having to sell the land to a competitor in order to honour his existing financial commitments.

The initial request was for a finance package that was to be rolled out in three stages. However, we decided that it would be better to restructure the application so that every aspect of the development funding was combined into a single package.

In order to make the prospect more appealing to our exclusive panel of investors, our team devised a new application that focused on the number of off-plan flats that had already been sold, the level of interest shown by other prospective buyers, and the borrower’s high level of commitment and existing investment in the project.

We also took steps to show how the costs would reduce as the various stages of the build were completed.

Our efforts paid off, and within just two weeks, we managed to secure a loan amount of £6.21 million, which meant that the project could go ahead without any delay or further complications.

The investor we sourced for our client offered a revolving facility for the full £6.21 million amount, which was approximately 65% to 70% of the gross development value. This covered the full cost of the initial construction phase, which delivered 48 high-quality luxury flats within the first 10 months.

The interest charges and administrative fees were subsequently rolled up and added to the overall cost of the loan.

As the build progressed, the developer had the option of refinancing the original deal in order to take advantage of a cheaper rate once the first stage of development was complete.

Any finances owed to the lender are paid back by means of pre-sales and completed sales, and these funds are then made available to the borrower again in order to finance the end stages of the project.

“When most other bridging specialists were telling me my borrowing options were practically non-existent, UK Property Finance defied my negative expectations and found an appropriate funding solution that was fast, flexible, and realistically affordable. Although we still have another 8 months left before the project is complete, the end goal is now firmly in sight, and the remaining flats, many of which we have already sold, are almost finished.” – Our satisfied property developer client has asked to remain anonymous.

We are glad to report that both the lender and the client are extremely happy with the solution that we devised!

To find out more about our services as a provider of unique bridging loan solutions, please use the contact form provided on this website. Alternatively, speak to us directly on 0116 402 7982.

The Association of Short-Term Lenders has just released a report that shows a sustained upward trend in the number of bridging loans issued in the last quarter.

In the period leading up to March 31, 2016, ASTL members provided their clients with over £2.7 billion in bridging finance products, and this amount is expected to increase again in the coming months. In terms of percentages, this represents a 16% rise in the amount borrowed compared to the period ending March 31, 2015.

According to Benson Hersch, ASTL chief executive, bridging finance is now a highly established niche product that is going from strength to strength, even though the economy itself is still a cause for concern for many business owners. The main reason for this is the high level of uncertainty following the results of the referendum in June, the effects of which have yet to be seen in the marketplace.

To quote Mr Hersch, “As applications begin to pick up over the next quarter, despite some negative factors, the need for bridging finance is likely to continue to grow, and our members are well-placed to take advantage of opportunities.”

As an added boost to the bridging loan industry, the actual value of bridging loan applications has also increased from the previous year by just over a fifth. However, the overall value of the loan book has experienced a small dip of around 4% when looking at annual trends. This provides a good indication that the loans themselves are being paid off at a higher rate.

With more and more banks and other high-street lenders tightening up their borrowing requirements, it seems that bridging loans are gaining serious ground as a genuine way forward for those in search of short-term finance as a means of providing growth.

Unlike traditional mortgage products and most other loan types, bridging finance is much more flexible and widely available. Bridging loans can even be sourced for clients who have experienced bad credit problems and for those who are unable to provide proof of income.

UK Property Finance has today completed one of its largest bridging loans to date. The multi-million-pound funding was required to purchase a large repossessed new-built office block complex in the centre of a major UK city. Our client, a recently formed offshore limited company, had a successful bid for the property at auction some 2 weeks prior to our contact and managed to purchase it at less than 1/3 of the marketed asking price being requested prior to the property being repossessed.

Since paying the required 10% deposit, our client has come to realise that he had been strung along for 2 weeks by his long-term and previously trusted mortgage broker, who was unable to locate the balance of the funds needed to complete the purchase in the 28-day time frame required, despite being so confident at the beginning that he could do so. Our client now understood that he needed focused and specialist help to prevent a default on the purchase agreement, a possible loss of his deposit, and, more importantly, a loss of his bargain property.

A trusted family business acquaintance, bridgingloans.co.uk, had been recommended to our client due to our no-nonsense reputation of being open and honest at all times and always doing the utmost to do what we say. After an initial telephone conversation, we located a lender who agreed to supply the funds required for the purchase in the timeframe needed and at an excellent rate, which was much lower than what our client had been quoted previously and seen advertised elsewhere. We emailed the basics of the deal back to our client, including details of a substantial discount we had managed to negotiate in the arrangement fee, and as such, the client subsequently gave us the authority to act on his behalf.

To get the best possible rate, we advised the client to secure the purchase funds required against other owned property rather than the office complex. Our client had a large portfolio of prime central London residential investments, which would be more interesting to a wider range of lenders and would give us more choice and ability to negotiate the best possible deal with the lowest fees, etc. We secured a first charge on one property and a second charge on another.

We completed all the paperwork required to transact the case and emailed this to the client. Due to the tight time frame, the client immediately completed the paperwork, emailed it back, and on the same day, we forwarded this emailed paperwork to the lender, who at the same time instructed the valuations. As the reputation and standing of bridgingloans.co.uk are so strong, the lender was able to process the case through to offer by using the emailed documents only. The case was completed just in time, and although one issue occurred during processing, we used our high-level contacts within the lender organisation to ensure that the problem was quickly and efficiently dealt with.

We will be arranging the long-term commercial mortgage finance for the client so he can repay the bridging finance as required, and also because of the performance of our team at UK Property Finance, we have been asked to look at two more bridging loan projects for the client.

UK Property Finance has again surpassed forecasted targets in October and November 2014, mainly due to the number of small bridging loan completions during the months.

The firm uses the term “small” to describe loans between £10,000 and £50,000. This size of bridging finance is less popular with other bridge lenders and brokers, who tend to shy away in favour of larger loans. In fact, the lowest net-value bridging loan is usually £40,000, and many lenders require a much higher minimum net loan.

The average loan size of the small bridging loans arranged by UK Property Finance for the stated period was just under £18,000, and the average completion time was 8 working days from initial discussions to funding. The company does all the legal work on these types of loans internally, so there is a two-fold saving: no additional solicitor costs for the client, and just as importantly, this has vastly improved the completion time way beyond that which most other companies offering the same product could ever achieve. On several of the completed loans, we even managed to add a second charge to the property without needing to wait for permission from the first charge lender to be able to do so. This once again was a valuable time-saving tool for all of our clients.

Small bridging loans are available as a first charge on unregulated property or land, such as buy-to-let houses, commercial units, or land, with or without planning permission. They are also available as second charges on the same types of security and additionally on personal residential properties where the requirement for the money is mainly for business purposes or where each applicant is classified as having a high net worth and earning over £150,000 per annum.

Applications are acceptable whether the client has credit issues or not, and also if the client has or does not have income proof. The underwriting is quick, efficient, and kept to an absolute minimum so that all cases are funded within the shortest possible time frame and with the least possible fuss. Small bridging loans are available in England, Scotland, and Wales. As of yet, the only coverage we have in Northern Ireland is for larger loans starting at £50,000, but watch this space.

UK Property Finance is happy to announce that we have today completed the arrangements to fund a third-charge bridging loan of £200,000 plus interest, etc. on a client’s main residential property. The money was used to urgently purchase the office premises where his business had been trading for many years and was about to be sold to a competitor.

The residential security property in South London was valued at over £3 million and had a high street first charge mortgage of £300,000 with an excellent base rate tracker. The £ 250,000-second charge loan was from an asset finance company and was also on an excellent rate for a second charge in the region of 4% per annum. The client urgently needed £200,000 extra but, for obvious reasons, did not want to repay either his first or second charge with a higher-rate loan.

The client was a UK national but spent the bulk of his time outside the UK as a non-resident, and due to the nature of his business, income proof for traditional finance such as a mortgage or remortgage was not possible. The only finance option remaining that we could arrange was a third (3rd) charge-bridging loan.

Anyone involved in bridging finance knows of the rarity of such a product; however, bridgingloans.co.uk managed to arrange this for the client at an interest rate similar to that obtainable from most second-charge lenders.

Further complexity arose when we discovered that the client could not travel back to the UK to finalise the funding due to a medical condition. Bridgingloans.co.uk managed to locate a solicitor who had offices in both the UK and the client’s current residential location and who had the insurance required to guarantee the relevant money laundering checks, etc. required on the client whilst outside the UK. A Skype conversation also took place to complete the deal and fund the project in just over 5 days from initial contact.

The client is over the moon with how ukpropertyfinance.co.uk managed to resolve his urgent funding needs.

Following the change in regulatory body from the Consumer Credit Act (CCA) to the Financial Conduct Authority (FCA), confusion still surrounds what is and is not an FCA-regulated second charge, second legal mortgage or loan, or bridging loan on a client’s main residence.

Due to the change in requirements, it has also become increasingly difficult to locate a lender who is willing to fund these types of second-charge loans, as many lenders are not able to accept the increased supervision and constraints (such as not being able to charge a valuation fee) and, as such, have decided to completely withdraw from this sector of the market. Potentially, the FCA now regulates all second-charge loans over £25,000 that are secured on an applicant’s own home. All loans of less than £25,000 are automatically regulated.

The few exemptions on loans over £25,000 are as follows:

• If the majority (over 50%) of the loan is to be used for business purposes, The business uses will often need to be fully documented, as it will not be enough for a borrower to say that the loan is for business purposes. Examples of business uses can be related to BTL or investment property purchases, commercial property issues such as investment into the premises or purchasing the freehold, cash flow problems, purchasing stock and machinery, business start-ups, company debts, end-of-year tax payments, etc. (providing this is not a personal debt). Business borrowing is available to individuals, sole traders, or limited company directors.
• If the client is a high-net-worth individual with an annual prove-able income of over £150,000 or assets (not including their own residence) in excess of £500,000, this will also be an exempt second charge loan or bridging loan. If the application is on a joint basis, then both applicants will need to satisfy the assets or income assessment test.

The new rules are viewed by lenders in a manner that means that even a rolled-up bridging loan that requires no monthly payments is no longer acceptable if a client has limited or no proof of income.

The Council of Mortgage Lenders has again released figures showing that annual bridging lending has increased by 25% and now stands at around £2.5bn per year. Bridging loans are becoming widely accepted as a tool for accepting clients’ short-term funding needs. The main advantage of bridging loans is that they can be arranged quickly when the client’s need is particularly urgent.

Bridging finance deals are often arranged at a fast pace, so a client needs to be sure they are getting good advice. It is important that when talking to a lender, an answer can be given right away, which is why speaking to a specialist bridging loan adviser is best. The increase in prevalence of bridging leads has led to a growing number of specialist brokers for this market. Some mortgage brokers will try to service the deal themselves, while others will pass the inquiry onto a specialist.