Best Bridging Loan rates in the UK right now
Are you looking forward to buying a piece of property or any other asset but don’t have the cash up front to finance that transaction? You can get financing solutions suitable for your specific circumstances. One such solution is bridging finance.
What is a bridging loan? And which ones are the best?
Here is a detailed breakdown of a bridge loan and how it differs from other financing solutions. The best part is that you can compare bridging loans listed below to find the best one.
Let’s delve into the specifics of this type of financing or get a bridging loan below with approval within 24 hours of application:
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What Is A Bridging Loan?
Bridge loans are typically secured loans that can help buyers complete a property purchase – even though they might have an existing mortgage.
The whole trick behind a bridge loan is providing fast short-term cash secured by the property being bought. As a result, bridge loans are common in the real estate sector.
As the name suggests, a bridging loan helps bridge the gap between purchasing an asset and waiting for other funds to pay off the loan.
This could be in the form of selling or renting the property being bought to repay the loan. Lenders that offer money in this manner have to be compliant with the Financial Conduct Authority (FCA).
Some unregulated bridging loan solutions tend to have a higher interest rate.
Bridge loans are unregulated when they are not secured by your home but rather secured by a property you do not reside in.
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What Makes Bridging Loans Different?
One stark difference between the bridging loan market and other forms of finance is the variety of options available. For example, financing applicants can apply for an unregulated or regulated bridging loan. These types of bridging loans are available as open bridging loans or closed bridging loan options.
This variety ensures that each applicant gets a suitable deal. Thus, bridging loan providers do not try to fit all their clients into a ‘one-size-fits-all’ loan. Also, bridging finance does not demand monthly repayments like other conventional financing options.
Application Process And Timeframe
Although the application process is quite elaborate, the timeframe is relatively short compared to other conventional lending options. Since the bridging loan application is fast-paced to cater for customers buying property from auctions, for example, a conditional offer is made within a few days.
As long as the exit strategy is clear-cut, the application process shouldn’t take too long. This factor is one aspect that carries much weight on a bridge loan application.
Afterwards, the applicants can expect a conditional offer and all legal checks done by solicitors. From then, the funds can be released.
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Closed Bridging Loan vs Open Bridging Loans
A closed bridge loan is a more restrictive kind of bridging loan.
As a secured loan, closed bridge loans require buyers or property developers to pay the full amount of their loan as soon as the property has been sold. By contrast, an open bridging loan provides more wiggle room for applicants to pay as time goes on.
Typically, open bridge loan deals allow up to a year for buyers or developers to repay the loan. Both these options are great for property investment but can also work for other scenarios as well.
Calculating Interest Rates On Bridging Loans
Bridge loan providers typically use one of three types of interest rates. These types of interest payments are categorized as retained, rolled-up, and monthly interest rates. The third of these is quite straightforward.
Bridge loan applicants can pay their interest monthly, as opposed to retained and rolled-up interest, which is payable alongside the loan amount.
Essentially, the monthly interest bridge loan is similar to an interest-only mortgage.
All these types of interest rate payments are convenient for some bridging loans. For example, if a bridge loan applicant does not have enough capital to pay off the interest incrementally, they can pay it at the end of the loan term.
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Best Bridging Loans
Here is a list of some of the best bridging loan providers in the UK to choose from right now:
Octopus Real Estate
One of the trusted names in the U.K. bridging loan arena is Octopus Real Estate. This lender provides comprehensive property financing, including both regulated and unregulated bridge loans.
Its interest rate starts at 8.89%, and the minimum amount to lend is £50,000. The maximum LTV to borrow is 70% which means applicants need a 30% deposit.
There are other lending solutions that are suitable for commercial property purchases, which can also be leveraged by property developers or individuals looking into expanding their property investment portfolio.
Lend Invest
Lend Invest is a convenient lending platform that consolidates the entire process into a seamless online user journey. Similarly to Octopus, Lend Invest provides a wide variety of product offerings.
Apart from buy-to-let mortgages, and development finance, this lending provider prides itself on bridging loans regulated by the FCA.
These financing options are available to landlords, developers, and intermediaries.
Therefore, financing options are available for almost everyone needing bridge loan services, including 100% bridging loans with no deposit required. Lend Invest has over 12 years of experience in this field.
Oblix Capital
Oblix Capital is known for offering creative financing solutions to customers that walk through their doors. This provider also offers bridging finance, even for quite unique circumstances. The regions serviced by Oblix Capital include England, Wales, and Scotland.
Customer reviews are quite positive and commend the level of service provided by Oblix Capital staff. You can also finance both commercial and residential property through this lender.
Funding 365 Limited
Funding 365 Limited is ranked among one of the best auction finance providers. They offer assistance through bridging finance.
If you require a bridging loan quickly, this lender provides a swift application process to avail the funds to successful applicants.
The bridging loans provided by Funding 365 are unregulated, with a 75% LTV. Applicants can get access to short-term and mid-term finance.
Masthaven Bank
Masthaven Bank is a well-established lending institution that offers bridging and development finance. The approach from this bank is more commercial, and thus all “i’s” need to be dotted and all “t’s” crossed.
If you have a good credit rating and a solid exit strategy, Masthaven Bank is a good option for you.
The other product offerings offered by Masthaven Bank are those of a traditional bank, such as savings accounts and other conventional lending options.
Tuscan Capital
Of all the lenders on this list, Tuscan Capital might be the one with the most specialized lending solutions for short-term property finance.
Applicants can benefit from several bridging loan solutions, development exit bridge finance, and auction mortgages. Tuscan Capital also provides commercial bridge loans.
The products are flexible and built to fit the individual needs of each applicant. The progressive thinking behind product development at Tuscan Capital makes them one of the best bridge loan providers. Applicants from all over the UK can apply for their tailor-made lending deal.
Eligibility Criteria for Bridging Loan
Like any other personal loan or mortgage, bad credit history could be a red flag for most lenders. Due to a bad credit rating, lenders could classify an applicant as high-risk and charge higher interest rates.
Some lenders might also decline a bad credit applicant, but with bridging loans, the exit strategy could be a deal breaker.
Lenders might not find your application enticing enough if you don’t have a solid exit strategy in place, such as potential buyers or a remortgage agreement in principle.
Any mortgage secured by property also needs to have a decent value and no issues that could deter buyers, such as bad craftsmanship or leasehold problems.
In addition, experience in property could also improve the odds of being approved for a bridging loan, but it is not a requirement.
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Should You Get A Bridging Loan?
Considering the bridging loan cost aspect could easily put you off from applying for this kind of financing. However, in some cases, a bridging loan could be the best solution at the time.
For example, a buyer purchasing property to renovate and sell for profit could be well-served by using a bridging loan.
In the meantime, before the property is sold, the monthly payments due aren’t as exorbitant as they would be when using a traditional mortgage. The legal fees and the bridging loan interest are the priority for bridging lenders. This allows the buyer to make a lump sum payment after the sale.
The same applies to a potential property buyer aiming to rent out the property. Instead of taking out a short-term loan or acquiring buy-to-let finance, the buyer can use a bridging loan and pay off the remainder once the business has picked up.
As you can see from these scenarios, although lenders charge higher interest rates for bridging loans, this could be beneficial for business purposes.
On the other hand, if a homeowner is still paying another mortgage but would like to get another one for a second home, a bridging loan could be the perfect way to borrow money for this purpose.
Since paying for two mortgages at once could be impractical, getting a bridging loan could help delay paying full mortgage repayments for both properties.
Get In Touch With LoanCorp For Tailor-Made Lending Solutions!
Finding the best deal on open or closed bridging loans can be a big hassle. As such, it is vital to compare bridging loans to find a reasonable interest rate for a more affordable overall loan amount. Attempting to compare bridge loans solo is a mammoth task that is mostly futile.
Seeking help from expert loan brokers for a nominal arrangement fee could lead to huge savings in interest rates since they compare bridge loans for you. LoanCorp has the best bridge loan lenders on call to assist with bridge loans.
Get in touch with us today for tailor-made lending solutions that yield great savings in the long term as you repay the loan. We can get bridging loans for Northern Ireland customers as well and England, Scotland and Wales.
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FAQs
Do banks do bridging loans anymore?
Not all traditional mortgage lenders offer bridging loans.
These are more common among specialist lenders and online financing options. In most cases, banks offering bridging loan solutions will most likely do so in a secured loan fashion.
However, the interest rate is still bound to be a bit higher than traditional lending options most, if not all, lenders offer.
What is the alternative to a bridging loan?
The alternative to a bridging loan could be using traditional financing options. For example, if you would like to buy a second home, you can apply for a conventional home loan and pay both mortgages simultaneously.
With some help from expert advisors or brokers, financing applicants can be assured that they have the best chance of finding a good deal.
Final Thoughts on the best bridging loans
Although a bridge loan is a unique solution, some personal circumstances might be more favourable for this type of financing.
Whatever the reason for seeking a bridging loan might be, be assured that with the help of a trusted loan advisor or broker, you can get the best deal possible.
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