Fast Bridging Loans - UK Commercial and Residential

If you are not sure ask yourself this question.

“Do I need fast, flexible, easy access to short-term funding?”

If you do and you are looking to borrow over £30,000 the chances are that bridging finance could be a good choice for you. Traditionally associated with private residential property purchases and development (residential or commercial), bridging loans can be used in any situation where you need monies for a quick cash outlay, for example, before long term funding is arranged, or to bridge gaps between other funding streams. A bridging loan is an excellent way to source cash in the short term, especially as they are lent on a non status credit basis. However, elevated rates of interest mean they are not cost effective long term.

Bridging loans are especially suitable for Property Developers looking for ways to reduce or manage costs and pool equity or facilitating draw downs across an investment portfolio.

When should I not take out a bridging loan?

If you are looking to fund a larger or long term project it is more likely that cost, rather than speed, will be your priority. If that is the case, a property development loan may be more suitable. What are the advantages of a bridging loan over other forms of interim finance? Despite having higher interest rates – because the terms are usually shorter – a bridging loan is an excellent option if you need cash fast.

Here are seven advantages of bridging loans over other loans:

1. The terms are flexible, from one month upwards, allowing you to structure your loan around your requirements.
2. They are fast, loans can be arranged within 7 – 14 days or if speed is your priority, in as little as 24 hours.
3. The repayment can be flexible, too – you can often negotiate early repayment without a penalty but make sure you raise this at the start as some loan schemes carry penalties for early repayment.
4. You can borrow more – many lenders will provide 100% funding if they base their Loan to Value criteria on Open Market Value rather than purchase price, although you may need to watch out for open market valuations based on 90 – 180 day resale values.
5. If you wish to achieve a higher loan to value you can offer additional security.
6. Credit terms are often flexible, even if you have had previous credit problems they are not usually a factor in the decision making process, as long as any relevant details are declared up-front.
7. Interest payments are flexible – you can roll interest up to the lender’s maximum loan to value, paying it in one hit at the end of the term.

How quickly can I secure a bridging loan?

At Eland Business Services we have access to a wide range of financiers which means we can usually source a loan fast. Offers of finance can be made in as little as 24 hours and in some instances payment can reach your account in as little as 48 hours or even on the day of application. To achieve a high-speed completion your solicitor would need to be in possession of all relevant information and a valuation from an acceptable property valuer readily available. However, typically, you should allow 7-14 days so we can search around to get you the best deal.

What loans are available?

There are, essentially, 2 types of bridging loan which are discussed below. We will find and recommend the option most suitable to your situation – or a combination – depending on your circumstances.

1. Finance for Property Development
   The reason commercial bridging loans tend to be used for property is because they are so eminently suitable; they are flexible, quick to arrange and it is easier to qualify for a bridging loan than many forms of long term finance. This means we can arrange finance where no accounts are available, in poor credit history situations, where your property is not mortgageable or where you need funds to buy a property at auction. Bridging loans can be used to cover almost any aspect of property purchase, management or development on almost any type of premises and arranging them with us, anywhere in the world, is simple and straightforward.
2. Short-Term, Asset-Based Finance
   Another area where bridging can be useful is to cover high initial repayments on long term borrowing, so long as these repayment levels are set to drop before the short term loan matures. You can also use them to fund short term investments. This kind of interim financing should be arranged well in advance, where possible, to ensure funds will be available precisely when you need them. In addition, bridging finance can also help ease cash flow difficulties caused by unexpected bills such as emergency repairs or VAT.

What are the Lending Criteria?

A non-status bridging loan should normally achieve 80% loan to valuation, although this can rise to 100% if you have additional security or are buying your property for less than its market value. Interest payments can be deferred to the end of the loan unless it exceeds the lenders loan to value criteria.

You should also expect to pay a one off facility fee, interest rates 1% to 2% per month and remember that if you pay your loan off early exit fees may be charged.

If you take out a second charge bridging loan then the overall loan to value may be lower and costs potentially higher.

Unlike other loans, bridging finance can be obtained even if you have outstanding credit problems.

Hints and tips for applying.

Here are four facts to think about when you are applying for a bridging loan.

• The cheapest bridging loans are those lent against purchase price.
• If you want to achieve higher loan to value borrowing, arrange to borrow against the open market value of your property.
• If you are a property developer looking for a bridging loan above normal loan to value ratios you may be eligible for mezzanine finance – to find out more about those get in touch.
• A larger bridging loan is more cost effective than a small one. You can roll-up the interest payments but remember, only to the lender’s maximum loan to value.

Why not try one of our bridging loan calculators for an indication of costs!

• Single commercial or residential property Bridging Finance Calculator.
• Home Movers Bridging Finance Calculator.