What are the benefits of bridging finance?

There are some unique benefits when considering bridging finance that you wonu2019t get with any other type of loan, with the following being the main advantages:nnSpeed of Arrangement: Bridging loans can be typically arranged in a very short space of time, often in as little as a few days, making them the perfect option for raising cash for time-critical purchases.nLow borrowing costs and competitive interest rates: UK Property Finance have access to all the market and therefore can find great deals on bridging finance from a wealth of specialist bridging lenders across the UK. Depending on your financial standing, you may be able to get lower rates and fees, but this will be assessed on an individual basis.nSimple application processes and lending criteria: Applications for bridging finances are considered on an individual basis by the lender and are generally open to all applicants, even those with a less-than-perfect credit history. Provided the borrower has sufficient security and a viable exit strategy, being approved is a relatively simple process, and proof of income may not be required.nDeferred Payment: A bridging loan is typically repaid in full, including any interest that has been accumulated, at the end of the loan period.nAvailable for all purposes: Provided the applicant can meet all their payment obligations, bridge loans can be used for any legal purpose whatsoever. They are especially useful for purchases that need to be done quickly, for example, when buying a property at auction.nMinimal Documentation: Bridging loans often need less documentation than standard loans, which simplifies the application and approval process.nMultiple exit strategies: Borrowers can repay the bridging loan in a variety of ways, including selling the property, refinancing with a standard mortgage, or seeking other finance.nFlexibility: Bridging loans have very flexible repayment terms, allowing borrowers to adapt the loan to their individual financial circumstances and needs.

What are the cons of a bridging loan?

When looking at the positive aspects of bridging finance, itu2019s equally important to consider the disadvantages:nnHigh Interest: When comparing the high-interest rates attached to bridging loans with more traditional long-term loans, you will find that the borrowing costs tend to be higher due to the short-term nature of this type of loan.nAs a bridging loan is a secured loan, it is necessary to have sufficient collateral to offer the lender as security. Without enough equity or assets to guarantee the loan, finding a lender who is willing to take the risk will be difficult.nThere are various fees and charges associated with bridge finance, which can add up quickly and significantly increase the overall cost of the loan. Many lenders charge a variety of administration, processing, and completion fees, so it is advisable to know exactly what costs you will need to take into account.nDependency on property value: The amount a borrower may borrow through a bridging loan is frequently determined by the value of the property used as collateral, which may limit access to money for borrowers with lower-value properties.

How quick is a bridge loan?

Bridge loans are known for their speed compared to traditional loans, but the wait time can vary. In ideal situations, you might get an initial decision within a day and the funds within a week. However, a more typical timeframe is 5u201321 days, depending on the complexity of your situation and the lender's process.

Is it difficult to get a bridging loan?

Getting a bridging loan can be trickier than a regular loan. While lenders can approve them quickly, they involve higher risk for both you (due to high interest rates) and the lender (as they're secured on property). To qualify, you'll typically need a solid financial situation, a clear plan to repay the loan (often through selling an asset), and potentially good credit.

Do you need proof of income for a bridging loan?

Proof of income for a bridging loan is usually less crucial compared to traditional loans. Since bridging loans are secured on property and often repaid in a lump sum, lenders focus more on the value of the asset and your exit strategy (how you'll repay). However, some lenders might request income documentation to assess your ability to cover interest payments or for future business with you.

Can I borrow money against my house to buy another property?

Yes, borrowing against your house to buy another property is possible. It's achieved by leveraging your home's equityu2014the difference between its value and what you still owe on your mortgage. There are ways, like remortgaging or taking out a second mortgage, to access this equity. But remember, this increases your debt and puts your home at risk if you can't repay.

Do you make monthly payments on a bridging loan?

Bridging loans typically don't require monthly payments like a traditional mortgage. You'll usually repay the entire loan amount (principal + interest) in a lump sum at the end of the term, which is often short, around 1 year. However, some bridging loans may require monthly interest payments, so be sure to clarify the repayment structure with your lender before you borrow.

What happens if you don't pay a bridging loan?

Missing payments on a bridging loan can be serious. It can lead to hefty late fees, higher interest rates, and damage to your credit score. In more severe cases, the lender could repossess the property used as security for the loan or even take legal action to recover the debt. If you're struggling to repay, it's crucial to communicate with your lender early to explore options like extending the loan or finding alternative solutions.

How risky are bridging loans?

Bridging loans involve significant risks. While they offer fast access to funds, they come with high interest rates and short repayment terms, putting pressure on you to repay quickly. They're secured on assets like property, so failure to repay could lead to repossession. A solid exit strategy, like selling a property, is crucial to avoid getting stuck in debt.

Do bridging loans show up on your credit report?

Yes, bridging loans will typically show up on your credit report. This includes both successful applications and unsuccessful ones. Having a bridging loan on your report isn't inherently negative, but it can affect your credit score, especially if you have multiple applications or delinquencies. Make sure you understand the impact on your credit score before taking out a bridging loan.

Bridging Loans Quick and Flexible

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Why UK Property Finance?

UK Property Finance Ltd. is a FCA authorised whole market broker. We have established relationships with the most reputable lenders across the UK. This has given us access to the best deals and rates available. We are specialists in bridging finance. We can guarantee to partner our clients with the right lender to suit their unique requirements. Whatever your goals are, we will find the perfect bridging loan for you.

Speak to day with one of our expert advisors to discuss the best solution for your situation.

What is a Bridging Loan?

Bridging finance is a short-term, secure loan that can be arranged quickly. A borrower can be approved in as little as a week! Borrowers have various reasons for applying for a bridging loan. Most commonly, bridging finance is used to bridge the gap between buying a new property and selling their current one – when there is a delay in the chain.

Watch our video: Bridging finance made easy!

How do Bridging Loans Work?

Bridging finance allows you to unlock the value of a property by using its built-up equity as security. Unlike conventional mortgages or other secured loans, these facilities are arranged swiftly and often accept security that might be deemed unfit by traditional lenders, for instance, properties that are in disrepair or missing basic amenities like kitchens or bathrooms.

Bridging finance is intended for short-term needs, it’s not designed to be a long-term borrowing solution. In fact, its brief duration offers several unique benefits:

Many options come without exit or early repayment charges.
The application and approval process is notably fast.
It accepts properties that might be unsuitable for other lenders due to their condition.
Interest can be capitalised over the loan’s term or for a specific period with repayment due at the end.
Verification of income or affordability is typically less stringent if exit of the loan is by sale of a property.
Applicants with a less-than-perfect credit history are often not penalised.
There are generally fewer restrictions regarding the borrower’s age.

This makes bridging finance a flexible tool for addressing immediate cash flow needs or seizing time-sensitive opportunities without the lengthy processes of standard loans.

For more information on bridging loans read our bridging finance guide

The Bridging Finance Process

The process for obtaining a bridging loan is designed to be efficient and straightforward, ensuring you access to funds when required. Below is an outline of the typical steps involved, with the added flexibility that both properties and land can be used as security.

Initial enquiry

Begin by contacting one of our experienced advisors, they will discuss your specific needs and determine if a bridging loan is the appropriate solution for you.

Application and documentation.

Complete the application form and provide details about the asset you intend to use as security. This asset could be a property or land.

Typical information includes:

A detailed description and condition of the asset.
Estimated market value
A clear exit strategy outlining how you plan to repay the loan
Abit of background information on you as the borrower

Valuation

The lender will arrange for an independent valuation of your asset. This step is essential as it determines the maximum amount you can borrow, usually based on a percentage of the asset’s value. This applies whether you are using a property or land as security.

Assessment of the exit strategy

Given that bridging loans are intended for short-term financing, a robust exit strategy is vital. Whether your plan is to sell the asset, refinance with a traditional mortgage, or use another repayment method, the lender will need confirmation that you can settle the loan by the end of its term.

Legal documentation

You will proceed to the legal stage once the valuation and exit strategy have received approval. This involves:

Reviewing and signing the loan agreement
Providing necessary legal documents and answering legal questions about the property
Organising any associated legal fees.

Funding

After all legal documentation is in place and conditions have been met, the funds are typically released swiftly, often within days. This quick turnaround is one of the primary advantages of a bridging loan.

Repayment

At the end of the loan term, you will repay the full amount. Usually, you achieve this through the sale of the secured asset, refinancing, or another pre-determined method, as detailed in your exit strategy.

This streamlined process offers a fast and flexible solution for short-term finance, making it a valuable option when you have a clear plan for repayment.

Below are few common types of bridging finance:

How Much Does a Bridging Loan Cost?

To calculate exactly how much a bridging loan will cost, we have created a bridging calculator. Simply input your data into the relevant fields, and the bridging loan calculator will do the rest!

Bridging Loan Calculator

Basic criteria for borrowing:

You need to be at least 18 years old and have property in the UK, which is also open to foreigners.
Properties: Residential, commercial, or land across the UK, including uninhabitable conditions.
Loan sizes begin at £20,000, with terms ranging from 1 day to 1 year. The maximum loan-to-value (LTV) is 75% without additional security, and can reach 100% with additional security.
We accept flexible borrower profiles, have no age restrictions, and accept adverse credit.

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We needed a bridging loan to help us refinance our property. Highly recommend Jessica who is always helpful if there’s any problems she gets onto them straight away.

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UK Property Finance are wonderful. We had a complicated house sale, splitting our title and converting our barn. It was a complicated bridging finance situation.

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Bridging Loans Quick and Flexible

Why UK Property Finance?

What is a Bridging Loan?

How do Bridging Loans Work?

The Bridging Finance Process

How Much Does a Bridging Loan Cost?

Seemab Ali

Mrs Osborne

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