Bridging loans are a type of short-term loan that can be used for a variety of purposes. They are secured against property, which can be residential, buy to let or commercial. Bridging loans offer a quick solution to securing finance. Bridging loans are short term finance usually used to provide some breathing space between the purchase of property and selling or remortgaging it.
Usually bridging loans tend to be between 6 to 12 months long but they can be as short as a few days and as long as 2 to 3 years. In the end, you will need to repay the loan, before you are able to get a bridging loan you will need to prove to the lender you have an exit strategy.
If you are just using the subject property (the one being bought) as security then you can typically get up to 75% loan to value but if you have additional security the lender can use such as other property then you can potentially go up to 100% loan to value.
Bridging loans are fast to arrange Bridging loans can be arranged within a matter of days. There is no lengthy application process, they tend to use automated valuations to limit the need to go to the property to carry out a physical inspection.
Bridging loans are secured against a property, so the amount of deposit you will need depends on how much the property is worth, you will usually need a minimum 25% deposit but you will need to have slightly more cash than this if the interest is on a retained basis.
A Bridging loan will be set up either on a retained, roll-up, or serviced basis.
Retained Interest –
This is where you will pay the interest on the loan for the entire term up front and this is deducted from the gross loan.
Roll Up –
With a roll-up loan, all of the interest rolls up onto the capital sum so that when you come to repay it, you would repay the original loan plus the interest.
Serviced –
This is where the interest on the loan is paid monthly, this means your net loan is not reduced by any retained interest and you don’t have to pay a larger sum at the end of the loan compared to roll up options but typically this type of bridging loan is not available on properties you either live in or intend to live in and the other major downside is the lender will want to make sure you can afford the monthly interest payments.
Bridging loans are used for a multitude of different reasons such as-
Momentum Mortgages are specialist mortgage brokers based in Sevenoaks, Kent.
We can help you get a bridging loan. You can book a free strategy call here on our website to work out a plan and answer any questions you have.
A few things you need to take into account before applying for your loan:
Once you have these details (we can help you with this), we can then help match you with a lender.
Your home or property may be repossessed if you do not keep up repayments on your mortgage.
Your home or property may be repossessed if you do not keep up repayments on your mortgage.
Momentum Mortgages is an Appointed Representative of PRIMIS Mortgage Network registered in England Wales, company number 11806827.
PRIMIS Mortgage Network is a trading name of First Complete Limited which is authorised and regulated by the Financial Conduct Authority for mortgages, protection insurance and general insurance products.
We will charge a fee of between £99.00 and £999.00. The amount we will charge is dependent on the amount of research and administration that is required.Please refer to the Terms of Business for further information.
The guidance and/or advice contained within this website is subject to the UK regulatory regime and is therefore primarily targeted at consumers based in the UK.
The Financial Conduct Authority does not regulate all Buy to Let mortgages
