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Bridging loans fall under the category of secured loans, effectively “bridging the gap” between buying and selling property. Whilst mortgages are a great way of financing a property purchase, they can often be time-consuming, and are therefore inappropriate for such fast-pace circumstances. Bridging loans can help you to seize opportunities, being a great way to get access to the finance you need, when you need it.
As a bridging loans broker, Proper Finance can help you compare a range of different bridging loans from our list of reputable lenders.
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What Are Bridging Loans?
As previously mentioned, a bridging loan is a type of secured loan that helps to “bridge the gap” between completing on a new property and selling an old one. They can be used for both commercial and personal property purchases, and offer buyers quick access to finance.
There are two main types of bridging loans available, these being:
- An open bridging loan
- A closed bridging loan
An open bridging loan is usually taken out for urgent transactions. These types of bridging loans usually won’t require a detailed plan on how the borrower intends to settle the debt, and therefore will have no fixed repayment date. However, whilst there is no set repayment date for this type of finance, borrowers will typically be required to repay the loan within a year of taking it out.
In contrast to this, a closed bridging loan will require the borrower to know exactly how the loan will be paid off, and have this paid off within a year. A lot of closed bridging loans are settled in only a few months. These types of loans are commonly used by those who are in the process of selling a house but waiting for the funds to come through so that they can complete on a new property.
What Are Bridging Loans Used For?
Bridging loans can be used for various different purchases. These types of loans are commonly taken out by homeowners, landlords and property developers, who want quick access to finance; whether that’s to purchase a property, start property development, or more.
Bridging finance enables borrowers to complete on a property faster than if they were to take out a mortgage. Borrowers could secure on a property in as little as 2 – 4 weeks, sometimes even sooner than this.
Whether for commercial or more personal purchases, borrowers can get quick and easy access to the finance they need through a bridging loan.
What Is the Eligibility Criteria for Bridging Loans?
You will usually have to meet certain criteria in order to be eligible for a bridging loan. Whilst this criteria can vary from lender to lender, some of the typical requirements borrowers will have to meet include the following:
- Lenders may only offer bridging loans to customers who also take out their new mortgage with them
- Proof of income in the form of pay slips or otherwise
- If commercial, borrowers may have to provide a business plan
- A property as security on the loan
It’s worth noting that this may not apply for all bridging loans, and will very much depend upon the lender, the loan type (open or closed) and the details of the borrower.
What is Bridging Loan Broker?
A bridging loan broker can help to narrow down your search for a bridging product, helping you to find the lender who is mostly likely to approve you based on your personal and individual requirements, including the loan amount, LTV and loan duration.
We can also help you save time in securing your loan, searching our network of lenders quickly rather than you having to go to each individual lender one-by-one.
How Can A Bridging Loan Broker Help Me?
At Proper Finance, we recognise that each project or purchase is unique, and unlike conventional mortgages, specialised financial products can be more tailored to meet your specific needs. Every lender has their own set of requirements, but by choosing to work with a bridging loan broker, you can discover the best terms and rates that cater to your individual circumstances.
We have access to the entire market, including challenger banks, bridging lenders, and private investors, ensuring that you can truly explore the best available products in the UK.
We strive to deliver a highly personalised experience, promptly addressing any inquiries. Within less than 24 hours, we can provide you with indicative terms that give you an idea of what to expect. Our services come without any upfront fees until you are prepared to move forward and have a formal agreement in place. This demonstrates our dedication in finding the perfect loan for your needs.
What Information Do I Need To Give a Bridging Loan Broker?
When seeking a bridging loan, it is essential to provide certain information to a bridging loan broker to ensure a smooth and efficient process. This includes:
- The purpose of the loan outlining whether it is for property purchase, renovation, or business investment
- Property-related details such as the location, value and condition
- Loan information including the amount and desired repayment terms
- Personal information including proof of identity, your income and your credit history
Providing accurate and comprehensive information to the bridging loan broker will help them assess your needs and find the most suitable loan options for you.
Do You Need a Deposit on a Bridging Loan?
Yes, you will usually have to put down a deposit for a bridging loan. This deposit is expressed as a percentage of the property’s total value, and is paid upfront in a lump sum.
The amount of deposit you’ll be expected to pay will depend on the LTV (Loan-To-Value) you’re opting for. For example, if you’re looking to get a 70% LTV bridging loan, you’ll be required to provide a deposit worth 30% of the property’s value.
The deposit percentage will represent the amount of the property you initially own outright. The remaining percentage will be offered up by the bridging loan, which you’ll then have to pay off.
Key Features of Bridging Loans
| Loan Amount | £10,000 to £25 million |
| Loan Duration |
3 to 24 months
|
| Rates From | 0.44% per month |
| Online Application | Yes |
| Collateral Required | Yes – first or second charge |
| Same Day Decision | Yes |
How Do I Pay Back a Bridging Loan?
Bridging loans are typically paid back either by the sale of a property or by raising another means of finance that’s built for more long-term use (i.e., a traditional mortgage).
The way in which you will be expected to pay back the bridging loan will vary depending on whether it’s an open or closed loan.
With an open bridging loan, you won’t typically be required to provide an in-depth plan on how you intend to repay the loan. Therefore, with this type of bridging loan there usually won’t be a fixed repayment date (however, it’s usually required that the loan will have to be paid back within a year since first borrowing it).
With a closed bridging loan in comparison, the borrower will be expected to provide the exact details of how they intend to pay the loan off. Many closed bridging loans are settled within a few months.
Regardless of how you pay off your bridging loan, as with any type of loan, it’s important to check you meet all of the lender’s affordability criteria, and are confident that you will be able to make repayments.
When Will I Receive Funds for a Bridging Loan?
Bridging loans can help borrowers complete on properties quicker than traditional mortgage options. When you’ll receive your bridging loan will depend upon the unique circumstances of your application, and completing on these types of loans can take anything from a few days to a couple of weeks.
There are various different factors that can affect the speed of the loan. Sometimes, this is simply down to the lender’s resources and how they manage loan applications. Other times, the borrower’s details can impact this – for example, the exit strategy, details of the asset being used as collateral, your credit score.
Where Can I Get a Bridging Loan in London?
In London, there are various sources where you can obtain a bridging loan:
- Traditional lenders such as banks and building societies
- Specialist lenders and private finance companies
- A reputable bridging loan broker like Proper Finance can expand your options, as they have access to a wide network of lenders
By conducting thorough research, exploring different lenders and seeking guidance from professionals, you can find bridging loan providers in London.
Some of the many locations in London you can get a bridging loan include:
- Central: Camden, City of London, Kensington and Chelsea, Islington, Southwark, Westminster, Lambeth
- East: Barking and Dagenham, Bexley, Greenwich, Hackney, Havering, Lewisham, Newham, Redbridge, Tower Hamlets, Waltham Forest
- North: Barnet, Enfield, Haringey
- South: Bromley, Croydon, Kingston upon Thames, Merton, Sutton, Wandsworth
- West: Brent, Ealing, Hammersmith and Fulham, Harrow, Hillingdon, Hounslow, Richmond upon Thames
Apply For Bridging Loans With Proper Finance
We are dedicated to finding the best finance options for all our customers, working with some of the UK’s leading lenders. All of our lenders are in-keeping with the FCA’s regulations on loans and lending, meaning any loan you find through our site will be from a safe, reputable lender.
Our comparison site is free to use, and can help you to compare a range of different bridging loan options. Compare bridging loans with Proper Finance today!
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