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Bridging finance specialists across the UK have noted an uptick in applications from parents looking to help get their kids on the property ladder. Not that this is particularly surprising when considering the unprecedented difficulties being faced by first-time buyers.

In May, the average house price in the UK hit another record high of £289,099. This represents an increase of more than £2,850 from the previous month or 1%. House prices have now soared to record highs for 11 consecutive months and are up an astonishing 10.5% from the same time last year.

The likelihood of house prices falling over the coming months is minimal, but there are at least signs of a modest slowdown in house price acceleration.

“Yes, prices have still risen 1 per cent on the month, marking the eleventh successive monthly increase, and yes, prices are up by 10.5 per cent on the year, keeping annual price growth in double digits, but this is the slowest rate of growth since the start of the year and shows the challenges ahead cannot be ignored,” commented Alice Haine, Personal Finance Analyst at investment platform Best Invest.

“With mortgage rates surging, following four consecutive interest rate rises from the Bank of England since December and further hikes expected this year, and inflation of 9 per cent eating into real incomes, it is only natural that prospective buyers may take a pause before plunging into the market right now.

“Add in the cost-of-living crisis and the fact fuel prices are now at record highs [petrol prices set a new average record of 178.5p per litre on Tuesday], and the cost of buying a home may deter those already struggling to meet their monthly obligations.”

Insurmountable costs for first-time buyers

Speaking on behalf of Halifax, managing director Russell Galley highlighted how impossibly expensive it is becoming to buy property in the UK.

“For house hunters, the extent of the impact of property price inflation continues to be linked to the type of home they are looking to buy,” he said.

“Compared to May last year, you would need around £10,000 more to buy a flat, but an additional £50,000 for a detached home.”

“This clearly creates a knock-on effect for those looking to make their first home move, as the rungs on the housing ladder have become increasingly wide.”

For first-time buyers, pulling together a ten per cent deposit for an average UK home now means saving at least £30,000. Where lenders insist on 15% or 20% deposits, the figure could be as high as £60,000.

Even last year, when average house prices were lower than today, data from Barclays indicates that the average deposit paid by a sole first-time buyer was £61,100.

This is the kind of money the typical first-time buyer simply cannot come up with. Faced with an escalated cost-of-living crisis, the dream of homeownership for millions of prospective buyers is likely to remain just that.

House prices are up a staggering £123,016 (or 74%) over the past decade, during which wages for many have stagnated.

Tomer Aboody, director of property lender MT Finance, said: “With prices rising by 74% in the past decade, it shows just how much the market is running away from first-time buyers,” commented Tomer Aboody, director of property lender MT Finance.

The bank of mom and dad

Traditionally, parents looking to help their children get on the property ladder have provided financial support in the form of a contribution to their deposit. With deposit requirements at an all-time high, many first-time buyers are finding this the only realistic way to qualify for a mortgage.

Elsewhere, first-time buyers (and their families) are setting their sights on properties away from the conventional housing market. With affordability and accessibility in mind, many are looking to purchase properties in need of renovations and repairs with the aim of gradually moulding them into their dream homes.

This approach has generally proved problematic for first-time buyers seeking funding from mainstream lenders. The vast majority of High Street banks are unwilling to lend against properties in a poor state of repair, which are often categorised as ‘not mortgageable’.

For example, if a property lacks a functional kitchen or a working indoor bathroom, it may be completely out of the running for a conventional mortgage.

This is where bridging finance is proving to be a lifeline for first-time buyers across the country. Bridging loans differ from conventional home loans in that they can be used to purchase any type of property in any state of repair. They are also designed to be repaid as promptly as possible, usually within 1 to 18 months of being issued.

How bridging finance is helping first-time buyers

To understand how parents are using bridging finance to help their children buy their first homes, consider the following everyday example:

1. A property is set to go under the hammer at auction for considerably less than its true market value, as it requires considerable repairs and renovations to bring it up to a liveable standard.
2. The parents of the first-time buyer take out a bridging loan, using their own home as security for the facility. Bridging finance can be arranged within just a few working days, making it ideal for time-critical home purchases and investment opportunities.
3. A bridging loan is provided to cover the full costs of the property and those of the subsequent renovations. The property is purchased at the auction, payment is made in full, and the new owners begin the renovations.
4. Several months later, the property has been brought up to an excellent standard and is no longer classified as not mortgageable. The property is remortgaged onto a longer-term repayment facility (like a conventional mortgage), and the bridging loan is repaid.
5. In the meantime, the bridging loan will be charged at a rate as low as 0.5% per month, making it a hugely cost-effective product when repaid promptly.

What is important to note about this approach to purchasing a home are three things:

1. There is no need to come up with any kind of deposit whatsoever, as no deposit is payable on a bridging loan. This means first-time buyers (with the assistance of their parents) with limited on-hand savings need not be counted out of the running.
2. Bridging finance opens the door to the kinds of property purchases that would be out of the question with a conventional mortgage. Particularly when it comes to fixer-upper homes in questionable condition, traditional mortgages are typically unavailable.
3. Prompt repayment of a bridging loan can make the transaction in its entirety so much more affordable than arranging any conventional loan or mortgage. Monthly interest can be as low as 0.5%, and all other associated borrowing costs are negligible.

Given the estimated 200,000 properties in England that have stood unoccupied for six months or more, bargain hunters are advised to extend their search beyond the conventional property market.

Flexible finance for homeowners

Bridging finance is also a significantly more flexible and accommodating facility than any conventional mortgage. This can be particularly useful for applicants who are unable to provide formal proof of income or may have imperfections on their credit file.

Likewise, homeowners who are retired and would likely be turned down by high-street banks are also eligible for bridging finance.

Qualification criteria for bridging finance are not nearly as strict as conventional mortgage eligibility checks.

Bridging loans are issued on the basis of the following:

1. Ownership of assets of sufficient value to cover the costs of the loan, i.e., the property of the applicant.
2. Evidence of a workable exit strategy in reference to how and when the loan will be repaid by the borrower

A good credit score and evidence of a stable financial position will pave the way for a more competitive product. But even with poor credit, no proof of income, and a history of bankruptcy, it is still perfectly possible to qualify for bridging finance.

Consult with an experienced broker

If you are considering taking out a bridging loan to help a member of your family get on the property ladder, independent broker support is highly recommended.

Bridging finance is issued in a variety of forms with different purposes in mind, so it is important to know which type of bridging loan is right for you. Your broker will also be able to advise on the alternative financial products available if there is something that could prove more cost-effective than a bridging loan.

Your broker will negotiate on your behalf to ensure you get an unbeatable deal from a top-rated lender. Many of the UK’s leading bridging specialists offer their services exclusively by way of broker introductions and do not deal with customers directly.

For more information on any of the above or to discuss the potential benefits of bridging finance in more detail, contact a member of the team at UK Property Finance today.

As if the UK’s economic picture wasn’t already sketchy enough, its future outlook is even gloomier. The cost-of-living crisis is likely to worsen before it improves, with the Bank of England warning that inflation could go beyond 10% before the year is out.

But there is at least one positive in all the doom and gloom, at least from a bridging finance perspective; while all this is going on, the bridging loans sector is not only booming but is also offering its most competitive products in history to a growing audience of borrowers.

Application volumes and inquiry levels continue to hover at unprecedented highs as businesses and consumers alike take their businesses away from the major High Street banks. The more difficult and expensive it becomes to qualify for conventional loans or mortgages, the greater the tendency to seek unconventional alternative options.

One of which is bridging finance, which, due to its speed, flexibility, and accessibility, has skyrocketed in popularity over the past couple of years.

“This is great news, of course, particularly in the challenging economic environment,” said Vic Jannels, chief executive at The Association of Short-Term Lenders (ASTL).

“The latest ASTL lending data for the final three months of last year has revealed that completions were £1.2m for the quarter, which represents a record high and an increase of 19% on the previous quarter. This has led to another increase in loan books, which now stand at £5.08bn,” added Jannels.

Housing market competition: A key driver

Gross bridging loan completions were up a full 32% (reaching £485 million) during the first six months of last year, increasing further to an impressive 52% by November. This momentum has been largely maintained throughout 2022, resulting in average bridging loan interest rates hitting a new all-time low.

All of which is playing right into the hands of prospective homebuyers, many of whom are becoming increasingly disenchanted with what is available on the High Street, if not entirely out of the running for mortgage loans, due to increasingly strict lending criteria.

Demand for affordable homes continues to outstrip supply in almost every part of the UK. For buyers looking to avoid regrettable chain-break scenarios, bridging finance is offering a fast-access lifeline. Secured against their current home, a bridging loan can be used to buy their next home outright and allow plenty of time to sell their previous home for its full market value.

In addition, property developers are turning to bridging finance to fund purchases and renovations of vacant properties across the country. As most major banks continue to classify homes in questionable condition as ‘not mortgageable’, developers are finding themselves with little choice but to explore the alternative options available.

Matthew Arena, managing director at Brilliant Solutions, believes that the bridging finance sector is playing a major role in easing at least some of the pressure the housing sector is under.

“Bridging is performing well and has helped with several key housing issues,” he said.

“With property supply being so scarce, the ability of investors to develop or refurbish property and sell quickly is driving the sector,”

“Equally, the regulated element of the business is growing as the drive to move is as high as ever and suitable property is so difficult to find.”

“This is leading to more refurbishment and also a higher tendency to pay for bridging as a chain-break solution because there is a greater certainty of sale and a higher perceived loss if the opportunity falls through.”

Competitive finance with flexible terms

Unsurprisingly, demand for fast-access bridging finance has triggered a major spike in product availability from a growing network of specialist lenders. Once a fairly niche field, the bridging sector has become fiercely competitive.

Covering the needs of consumers and businesses alike, there are so many lenders now fighting to get new customers on board that average interest rates have been plummeting. It is now the norm to be offered a bridging loan with a monthly interest rate in the region of 0.5% or less, having once been reserved exclusively for prestige clients.

Meanwhile, associated borrowing costs (arrangement fees, transaction fees, completion fees, etc.) have likewise been dropping for some time, if not being removed entirely by many bridging specialists.

Alongside increasingly competitive deals, the flexibility of bridging finance is also proving a big draw for prospective borrowers. Employment status, proof of income, financial position, credit score, none of the usual obstacles apply to bridging finance applications.

Bridging loans are issued primarily based on two things: the provision of assets of value to cover the costs of the loan and evidence of a viable exit strategy for timely repayment. No jumping through hoops and no need to disclose your entire life story, as remains the case on the High Street.

All of which paints a picture of a booming bridging finance sector that’s becoming increasingly attractive to borrowers from all backgrounds. And with more economic doom and gloom on the horizon, it is a trend that looks set to continue for some time to come.

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.