BRIDGING LOANS

Short term lending to bridge the gap

Bridging loans are used as a short term solution for quick purchases. They are usually used for things like auction properties, or homes that are not currently habitable and in need of refurbishment.
A ‘bridge’ is arranged to cover a gap in financing of between three months and two years. They are quicker and more flexible than a regular mortgage, focusing less and your income and more on the property itself. The prices of bridging loans can vary quite a bit, standard bridges may not cost as much as you think and will complete in around a month. There are some lenders with high rates who can transfer funds to you in a matter of days. These kinds of loans are very useful for ‘fixer-uppers’ which often struggle to get a mortgage.

Bridging Loans: The facts

Bridging is a temporary solution often used for property refurbishments or when money needs to be drawn down quickly. We have access to a variety of lenders with a range of products available.

Bridging loans are different because they’re short term. A bridging lender needs to know you can repay the loan in a few months’ time, whereas a mortgage lender needs to know you can pay off a mortgage over 40 years. This means they put less of a focus on your personal income, and are more focused on the property itself and your ability to either sell it or remortgage it at the end of the bridging loan. Fundamentally, a bridging lender’s security is the property itself and the ‘exit’ of the loan (how the bridge will be repaid, usually by selling it or remortgaging it).

£ for the purchase
Short term lending
Quick Turnaround
Interest rolled up and interest serviced available

Are bridging loans faster than a mortgage?

Most bridging lenders aim to get a case completed within a month (standard auction timescales).
There are some lenders who are extremely quick and can complete in a few days. These quick lenders
will sometimes not instruct a physical valuation instead choosing to view it online. It’s steps like that
can speed cases through.

Not suitable for:

Those without a secure exit strategy
As a long term solution

Suitable for:

Light Refurbishment
Heavy Refurbishment
Auction Purchases
First time buyers
Experienced Investors

Are bridging loans more flexible than mortgages?

Bridging lenders are more flexible than mortgage lenders in a few different ways. The kinds of property they will accept are much more varied. Bridging lenders will lend against properties in a heavy state of disrepair. They will also lend against less traditional properties, I’ve seen bridges on Marinas, waste land and the freehold of a block of flats.

DEVELOPMENT FINANCE

Still confused or not sure this is what you need?

Development finance is a product that can offer you funds for the purchase of the chosen property and the renovation or build costs.

Learn more

Do bridging loans have monthly payments?

With a mortgage you would be expected to make monthly payments to pay off the loan along with the interest due. Bridges do not require monthly payments, the interest is added to the loan amount and repaid at the end of the period. So, if you were to buy a property to refurbish, you would not need to make payments during the course of the refurbishment, then when you come to either sell it or mortgage it at the end the proceeds from the sale or new mortgage would repay the bridging loan and interest. This is referred to as ‘rolled up interest’. You can choose to make monthly payment if you want to, this is ‘serviced interest’.

Do bridging loans have early repayment charges?

There are generally no early repayment charges and you only pay interest for the amount of time you actually borrow the money. So, if you agree to a six month period and pay it back in three months, you would only pay for those three months.

Do bridging loans have early repayment charges?

There are generally no early repayment charges and you only pay interest for the amount of time you actually borrow the money. So, if you agree to a six month period and pay it back in three months, you would only pay for those three months.

How to get a bridging loan

The easiest way to get a bridging loan, is to speak to a specialist mortgage advisor (that’s us!).
The process can vary from lender to lender, but generally follows the same steps.

1. First, give us a call. We are usually able to say over a 10-minute call what sort of options are available.

2. If you want to proceed we can then get full details and documents from you. We would complete our due diligence on you and assess your needs and circumstances and then shortlist a handful of appropriate lenders to approach.

3. Uplift will give them a call, talk through the case, and if happy issue ‘Heads of Terms’. The Heads of Terms are a provisional offer of finance which will quote us the rates, fees and conditions of the case. They’re the equivalent of a Decision in Principle for a Mortgage.

4. Next, we will instruct the valuation and supply them with the relevant documents. 

5. The lender will check them, wait for the valuation and, all being well, issue the offer documents.

6. After this it’s just down to the solicitors to do their work and set a completion date.

When not to get a bridging loan?

Bridging loans are more expensive than mortgages, they are a specialist product used when the situation warrants it. We will never encourage clients to use a bridging loan if there are cheaper alternatives elsewhere.
Sometimes you may have a property in mind to flip, but over two years instead of the usual six months. In this case it may well be appropriate to buy the property with a mortgage rather than a bridging loan.
It is extremely important to know you will be able to ‘exit’ the bridge, which is another way of saying you need to be able to repay it. Bridging loans are mostly unregulated, so our responsibility to give clear guidance is extremely important. It is part of our processes to ensure you will be able to repay this loan.

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