Here is a list of the most frequently asked questions regarding bridging loans, but as bridging loans are bespoke loans tailored to your specific requirements some of these answers are general. The best thing you can do is contact me for a no obligation discussion about your specific requirements in more detail.

Why should I deal with you rather than my mortgage broker or IFA?
Most mortgage brokers and IFA’s will know and offer rates from one or possibly two lenders, but being able to deal with all lenders allows me to offer you the loan that is most appropriate to your requirements. Remember a bridging loan is a bespoke loan, specific to your requirements.

What is a bridging loan?
It is an interest only, short term loan secured on land or property

What can I use a bridging loan for?
You can use a bridging loan for any legal purpose. (see uses)

What type of property can be used as security?
Lenders will accept residential freehold and leasehold property, commercial property and land. All property used as security must be in the UK.

How much can I borrow?
The amount you can borrow is based on the value of the property being offered as security, this can be property which you already own or property being bought. Most lenders will lend between 65 – 75% loan to value on a 1 st charge and 65% on a 2 nd charge basis.

What is a 2 nd charge?
If you have a property with an outstanding mortgage, that mortgage lender will have the 1 st charge over your property. If there is sufficient equity available within the property a 2 nd lender can lend you additional funds and they place a 2 nd charge on the property.

What is the minimum and maximum loan?
Bridging lenders will lend from £26,000 to £5m+.

Can I borrow 100% of the purchase price?
Yes, you can borrow 100% of the purchase price if you have additional property or properties to offer as security.

How long can I borrow the money for?
Bridging loans can last from 1 day to 1 year.

Can I repay my loan early?
Yes, see question below regarding exit fees.

Can I make capital reductions?
Yes, you can reduce the outstanding balance and monthly payments.

How much will a bridging loan cost me?
Rates start from 1% and can go up to as much as 2.5% a month. Dealing with a broker gives you access to the best and most appropriate deal for your requirements from across the whole of the market.

Can I add the interest payments to the loan?
Some lenders will allow you to roll the interest up into the loan rather than make the monthly payments. This is only applicable where the total borrowing remains within the lenders maximum loan to value.

Why is a bridging loan more expensive than a regular mortgage?
Bridging is more expensive than a regular mortgage as it is a short term financing facility. Traditional mortgages are loans over 25 years whereas bridging loans run from 1 day to 12 months with the average term being 3 months. Warning: Although bridging is expensive, choosing the wrong lender can make it very expensive.

Are there any upfront fees?
The majority of lenders have no upfront application fees; the only fee due at application is the valuation fee for the property.

What are the other costs?
Valuation fee on all properties offered as security, lenders arrangement fees, lenders solicitors fees and exit fees

What are the exit / redemption fees?
Some lenders have no exit fees, some have no exit fees after you have made two months interest payments and some lenders charge 3 month interest as an exit fee. This is where dealing with a broker who has access to all lenders can save you real money.

Do I need my own solicitor?
Yes, it is recommended that all borrowers seek independent legal advice prior to signing any legal documents.

How long does it take to arrange funds?
Bridging loans can be arranged is as little as 48 hours but this is the exception rather than the norm. Loans take on average 5-10 working days to arrange.

I have a bad credit history, arrears or CCJ’s does this affect my application?
No, bridging lenders look at all applicants.

I am self employed or have no accounts does this matter?
No, the majority of bridging lenders lend on a non status basis

Can a Limited Company take out a bridging loan?
Yes, but in most cases the directors will be required to give personal guarantees.

Can I use property that I do not own as security?
Yes but the property owner must be party to the loan

Are bridging loans regulated by the FSA like traditional mortgages?
If the lender is taking a 1 st charge over your residential property then the bridging loan will be regulated by the FSA. If the lender is taking a 1 st charge over an investment property or a 2 nd charge over your residential property then it is not regulated. Make sure you only deal with a regulated broker and a regulated lender.

Who are the bridging lenders?
There are about 30 principal lenders in the UK, whose sole business is providing bridging loans, many of whom will only deal directly with registered brokers.