Bridging Loans

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A Bridging Loan is a short-term funding solution used to ‘bridge’ a finance gap until a longer term solution can be arranged. Bridging Loans provide quick access to funds and require a credible exit strategy to ensure the Bridging Loan is settled at the end of the agreed term. A property asset is required to provide adequate security for the Bridging Loan.

In Summary:

• Bridging Loan funding can take two forms, regulated and non regulated. Regulated Bridging Loans are typically for residential property and domestic homeowners, in need of funds fast, e.g. for their primary residence or personal use. Non regulated Bridging Loans are typically applicable to business or commercial purposes, e.g. for investment properties or complex transactions.
• Bridging Loans can help in a whole range of situations eg:

               Buying a new property before selling the current one

               Refurbishment or development projects

               Time sensitive property deals

               Covering short term cash flow gaps

               Resolving inheritance or legal delays affecting property transactions

• Property used as security can be residential, commercial, or mixed-use asset. Some lenders accept multiple properties as security (cross-collateralisation).
• Clear exit strategy required, eg the sale of the property used as security or refinancing onto longer term debt. 
• Loan amounts available are limited by the value of the property asset(s) used as security. The maximum loan-to-value (LTV) percentage offered varies depending on property value, condition, client profile and the risk assessment of the exit strategy. LTVs of up to 90% are available, if the asset is land only LTVs of up to 55% are available.
• Bridging Loan repayment terms are typically 1 to 12 months, some unregulated products will allow up to 36 months.
• Repayment options typically include either repaying the entire Bridging Loan amount (including interest) at the end of the loan term or repaying interest monthly (non regulated lenders only) with the principal balance repaid in full at the end of the loan term. Failure to repay the loan could result in the lender repossessing or selling the property to recover their funds.
• Interest rates are typically 0.5% to 1.5% per month.
• Fees associated with Bridging Loans typically include  

               Arrangement fee (typically 1-2% of the loan amount)

               Exit fee (if applicable, usually 1%)

               Valuation fee

               Legal fees

• Clients with adverse credit considered, provided there’s a clear exit strategy and sufficient security.