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Top 10 Finance Ltd, Bridging Loans Rex House 4-12 regent street London SW1Y 4PE

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FAQ.

Where do you provide bridging finance?

We work with lenders that can offer a bridging loan anywhere in England, Scotland or Wales. A limited number of bridging loans are also available in Northern Ireland although in this case, they have to be in exceptional locations with a strong sales record in the past and current market.

 

How long do they last and how much can be borrowed?

Bridging loans are short-term finance, lasting no more than 12 months you can, however, choose any length of time up to 12 months. In very rare circumstance a lender will allow a 6-month extension. The amount that you can borrow is determined by the LTV  (loan to value), usually, lenders will lend up to 75% loan to value, with the most competitive interest rates on 60% or less LTV you can get up to 100% of the property value if you have another property that can be used for security to do this you would offer the lender a charge over both of the properties the one you intend to purchase and also your existing property, either on a second charge behind your current lender or they would pay off the existing mortgage and replace it with the bridging loan, note in these circumstances if you were to take the second charge option you would need to get permission from your mortgage provider  to allow for the second charge to be put in place

 

What type of property can I get a bridging loan on?

Bridging loans can be secured against, a residential property houses flats and also commercial properties and properties with both a commercial and residential element including hmos  hotels, offices, in fact, any type commercial property as long as you have equity in the property for them to lend against. You can also get a bridging loan for Commercial Property Development these are used for the development of property instead of using development finance.

 

What is the interest rate for a bridging loan?

Bridging loan interest rates start at 0.4% per month of the loan amount because they are a short-term loan, interest rates are always more than a typical mortgage or business loan. You can use our loan repayment calculator to calculate what your costs are likely to be. So if you had a bridging loan for £150,000 and your interest rate was 4 % per month  then your monthly payment for interest charges would be £150,000 x 0.4% is going to give you a repayment of £600 per month that the loan is outstanding you will not have to pay this on a monthly basis as it can be rolled up into the actual loan, you will get less on day one but if that helps then it is fine with lenders, you could also opt to cover the monthly repayment although if you do so then a lender would need to see proof from you that you have the resources available to do this.

 

Bridging loan quotes are more expensive than a traditional mortgage, however, this should be offset by the fact that a loan will provide a benefit to you. I.E getting to purchase a property that you would not have been able to you or buying and be selling a property for a profit. I.E a situation where someone has exchanged contracts on their current home but wants to buy a property before completing bridging finance is there to bridge the gap. You could also use a bridging loan for buying at auction as you only have 28 days to complete and a normal mortgage just would not be available to you in this timeframe. Also, they can be used to buy land instead of developer finance even if the land has yet to gain permission you can buy with a bridge loan get the planning in place and then sell on at a profit.

 

How long does it take for funds to be received?

Bridging loan funds can be released in as little as 72 hours, providing all the paperwork can be completed in time. However because you have to take into account legal paperwork valuations etc, you should really allow 2-4 weeks, it could be even longer in a complicated situation. Also it is important to have a good broker onboard to push things along, when taking out a bridging loan there are two sets of solicitors to deal with the lender and obviously the borrower unless things are kept tight timescales can start to slip this is where your broker will keep things moving forward and deal with any issues and problems as they arise in order to get the loan completed on time.

 

What is an exit strategy?

Bridging lenders will always ask you what your exit strategy is, I.E how will you repay the loan, it could be by selling the property or raising cash from another source or selling your existing home or any other method that you will have available to demonstrate that you will have the funds to redeem the loan when it falls due. You will need to demonstrate to the lender that you have a good plan for this I.E if it is from sale of the property they will want to know that it is actually up for sale with an estate agent and being actively marketed at a reasonable price, if it from another source of income such as probate or sale of another asset they will also need to be reassured that this is feasible and when the funds are due to be released.

 

What costs do bridging loans come with?

Besides the interest rate, you will be asked to pay a surveyor to carry out a valuation for the lender this will be agreed beforehand between you and the surveyor and is based on the amount of the loan you require and also the actual value of the property you are offering as security for the loan, you will also have to pay, your legal fees and also the legal fees of the bridging lender's solicitors, these will be agreed in advance and you will have to pay for the lender's legal fees when you apply for the loan these start at around £500 and are based on how complex the lender thinks the legal fees will be.

 

The other costs are the lenders' arrangement fees which will usually be 2 % of the loan amount, all lenders charge the same 2 % arrangement fee but they do not charge any exit fees.

 

Can the loan be paid before the end of the term?

Yes, loans can be paid off at any time without incurring penalties, you will only ever be charged for the time the loan was outstanding at a daily interest rate so they would work out the number of days the loan was outstanding for and then just charge for the days you actually had the loan for, although the minimum amount of days would usually be 30 after that if the loan was outstanding for 31 days then you would just pay for the 21 days.

 

Does a poor credit history affect my chances of getting a bridging loan?

As the security of a bridging loan is secured against a property, a poor credit history usually doesn’t affect your chances but it will affect the rate of interest that a lender will offer. Bridging loans are considered non-status so they are only really interested in the property that you are offering as security for the loan, so even if you have poor credit ccjs etc you can still get a bridging loan.

 

What to do next?

Contact us by phone or use our online form, we will then go through your circumstances and work out what is the best bridging loan for what you are looking to achieve we can compare all UK lenders for you and offer a solution in just a few minutes, and tell you if you will qualify, including the interest rates, arrangements fees and what your legal fees will be, as one of the top brokers in the UK we also have access to special rates that are not available to other brokers.


 

With over 20 years experience you can be assured of the very best help and advice from our team.

 

 

Some bridging finance is FCA regulated and for these you would need an authorised and regulated firm which we are.

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