How to get a bridging loan?
Using our form, simply fill in basic details and a professional financial advisor will call you back between the hours of 9 am to 9 pm, 7 days per week. All of our advisors are highly trained and are willing and able to give you expert advice and an all-inclusive quote for your required bridging loan.
Bridging loans are commonly used to purchase a new property prior to an existing property selling. Bridging loans can also be used for releasing equity quickly when fast funding is required. Examples of this are property investment by auction, paying an urgent tax bill, debt consolidation, business finance injection, wedding deposit etc.
Bridging loan for auction properties
A Bridging loan is regularly used for purchasing auction property which is not suitable for mortgage finance. Normally a 10% non-refundable deposit is required at the auction and 28 days after that date, the balance of the purchase price is due. If the condition of the auction property is not suitable for a mortgage, for example the property has no kitchen or bathroom, a pre-agreed mortgage lender can place a100% retention i.e. will not release any of the mortgage funds until the property is habitable and all requested work complete. In this scenario a bridging loan is used for a short period of time until the mortgage lender is happy to release funds.
Types of bridging loans
There are two main types of bridging loan:
- closed bridge and
- open bridge.
A closed bridging loan is when there is an exit strategy in place which is guaranteed e.g. a buyer has exchanged contracts on the current property sale. An open bridging loan is used where the exit strategy is not guaranteed, e.g. existing property has not yet sold. An open bridging loan can be more expensive than a closed bridging loan as the risk level for lending is higher for the bridging lender.
How long does it take?
Bridging loans can be arranged very quickly. In some cases, the bridging loan can be agreed within a few hours. Most bridging loan lenders offer interest roll up, enabling the interest of the loan to be retained meaning you donít have to pay interest until the whole loan is repaid at the end of the term. The flexibility of bridging finance is the primary benefit. You can pay off a bridging loan before the end of the agreed loan term. The interest rate of bridging finance is usually calculated daily and dependent on individual circumstances and cases but the monthly rates payable are typically between 1% and 2%.