From “What is a bridging loan?” to “What checks will lenders make?” here’s the Tiger Financial Guide to bridging loans and the application process!
If you have other questions about bridging loans and property development finance, our dedicated team of experts are on-hand to provide you with all the information you need to make an informed decision.
Tiger Financial are specialist property finance brokers working with a carefully selected group of bridging loan lenders from across the marketplace. We’re one of the UK’s leading brokers, with over 10 year’s experience in the industry. We are dedicated to ensuring every one of our clients finds the right product and the best rate for their loan.
Everything you need to know about our bridging loans
A bridging loan is a short-term interest-only loan available to those that ARE:
- Buying under value from an LPA Receiver
- Purchasing before planning permission
- Buying at auction
- Borrowing against value not purchase price
- Development and refurbishment
- Buying with a deferred consideration
- Developing an uninhabitable property
- You wish to split the title
- When conventional credit is refused
- You need working capital
- You want no monthly payments
- When you need finance fast
Bridging loans are secured against property or land via a first, second or equitable charge.
As a short-term loan, they are generally taken out for between 3-12 months, but can be for up to two years.
As bridging loans are for the short-term, each client must have a plan in place to pay off the loan. This is known as an ‘exit route’.
A ‘first charge’ is the primary mortgage or loan secured against a property. This takes precedence over all other finance secured against it. However, If there is sufficient equity in the property, a ‘second charge loan could be secured against it.
Yes. Bridging loans and development finance are available throughout the UK, including Northern Ireland.
The normal loan to value (LTV) is 70% of the open market value, however there are some select lenders that will offer 75% or even 80% for residential property. Land and commercial property tend to be between 65%-70% LTV.
Individuals, UK Ltd companies, LLP’s, Trusts and overseas companies can apply. Other ownership structures may be considered.
Some do and some don’t. Usually for the cheapest rates, this would involve a lender that does do a credit check. However, there are many non status lenders who offer competitive rates that do not do a check.
No problem. The funding is decided based upon the strength of the property asset being used as security, regardless of the profile of the borrower.
No. We are not regulated by the Financial Conduct Authority. However we are happy to recommend someone who is.
An unregulated bridging loan is where the borrower or a family member will NOT reside in the subject property.
It depends. You have the option to either service the loan, or to have the interest “rolled up” and deducted from the gross loan, meaning there will be no monthly payments throughout the course of the loan.
For all loans, the borrower will usually have to pay for a valuation of the property, and the lenders legal costs.
Most lenders charge an arrangement fee of 2%, some lenders charge an administration fee, and for unusual deals, they may charge an exit fee when the loan is repaid.
Generally the minimum loan size is over £100,000. The maximum loan size is dependent on the strength of the asset being used as security. There is no realistic upper limit for the right project.
Depending on the speed of the valuation, and the preparedness of the legal teams on all sides; an offer can be provided with 24 hours and the funds available within 48 hours. The normal timeframe for a bridging loan application is 2-3 weeks, and for a development finance application 4-6 weeks.
Bridging loans are mainly used by clients that need quick, short-term capital to fund a property purchase. They include those who:
- Need to complete quickly. This might include property developers, who often have the opportunity to secure a great deal if they can complete quickly.
- Buy through a property auction. Bridging loans are popular with those buying property at an auction. Here, completion has to take place within 28 days which means traditional financing is not usually an option.
- Are in a broken property chain. A bridging loan enables a seller of one property to secure their new property before the sale of their existing property goes through.
- Want to buy an uninhabitable property. Traditional lenders will often not lend on a property if there is no kitchen, bathroom, central heating or running water (especially buy-to-let mortgages). A bridging lender will base its lending on the property’s value in its current condition, however. This means the buyer can get access to the property and work on it to make it habitable.
- Are renovating or developing a current property. A property investor may want to renovate a property within a few months and either sell it on or refinance. A bridging loan can often be the perfect vehicle for this short-term capital requirement.
- Have to get planning permission. In order to obtain planning permission and secure development funding, the developer may need immediate access to capital.
- Need a lease extension. When a property has a short lease a borrower will likely be refused a traditional mortgage. A bridging loan can be used to extend the lease, which then makes the property mortgageable through conventional lenders.
- Residential property
- Commercial and semi-commercial property
- Hotels and Pubs
- Development finance
- Investment Portfolios
- Industrial Units
- Nursing/care homes
- Multiple occupation (such as HMOs)
- Farms or agricultural property
- Offshore special purpose vehicles (SPV)
Yes. Funding is available regardless of the income of the applicant. Interest and fees will be rolled up for the duration of the loan.
Our loans are non status and based solely on the market value, regardless of purchase price.