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Bridging loan northern ireland

Written By:
Myles Robinson - Expert Finance Advisor

Posted: Jan 3, 2023

Fact Checked By:
David Nicholson - Finance Editor

Bridging Loans in Northern Ireland – We can get you approved in just 24 hours

Bridging loans are very flexible and useful in many different situations. If you want to break out of a property chain or solve temporary cash flow problems, then they’re the type of loan for you.

But can you access bridging loans in Northern Ireland?

In this guide, we’ll answer this question. We’ll also closely examine how bridging loans work, who they’re right for, and how to secure a bridging loan in Northern Ireland.

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An Overview Of Bridging Loans

Bridging loans are short-term loans used to bridge a financial gap for a short time. They’re often used by people who want to purchase a new property whilst they wait for the existing property to be sold.

They’re also frequently used by property developers who need to make an offer on a property they plan to refurbish and sell. Bridging loans usually come with higher interest rates than other types of loans. However, they’re more flexible than most other loans like mortgages. They’re also quicker to arrange.

Bridging loan lenders require you to have a strong exit strategy when you apply for a loan. You also need to secure the loan with an asset. This is usually an existing property. Your exit strategy needs to show the lender that you’ll be able to repay the loan within a certain period of time.

Let’s take a look at an example of a solid exit strategy.

Imagine that you plan to buy an auctioned property, refurbish it, and then sell it. You’ll need to prove to the lender that you can do this, and they will then grant you the funds. Once you’ve renovated and sold the property, you can use the proceeds to pay off the loan.

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How Bridging Loans Work

Bridging finance is granted on an interest-only basis. This means that you don’t need to make repayments on capital until the loan term comes to an end. As mentioned, the interest rates will probably be relatively high. At the end of the term, the loan is paid off as a result of your exit strategy.

Generally, you won’t be asked to make monthly repayments. If you use the loan to buy property or land then the exit strategy is typically a remortgage or a sale. You’ll need to provide evidence to the lender that this is achievable.

The loan will be given to you as a lump sum which you can then use as intended.


How Long Does It Take To Get A Bridging Loan?

The length of time it takes for your loan to be approved and granted will vary depending on the lender. Usually, it takes around 3 weeks for this to be completed.

However, at Loan Corp, we can get your loan approved within 4 hours. We work with over 200 bridging loan lenders in the UK, and funds are often received within just 1 week.

Bridging loans are quicker and easier to arrange than residential mortgages. This is because the approval decision depends on the strength of your exit strategy. If a lender is sure you can pay the loan back, your application has a strong chance of being granted.


Finding A Bridging Loan In Northern Ireland

Finding a bridging loan lender in Northern Ireland is more difficult than in other parts of the UK. This is because fewer lenders operate in Northern Ireland. Bridging lenders operating in Northern Ireland often only work within specific areas.

Unregulated bridging loans for commercial property are the easiest to come across in Northern Ireland. However, Loan Corp can help you find a lender to give you the bridging loan you need. If you are looking for an unregulated commercial loan, then we can help you find the best deal.

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Is A Bridging Loan Right For Me?

Whether or not a bridging loan is right for you depends on your circumstances. They’re particularly helpful as a form of development finance. This is used by landlords, property developers, and investors.

Let’s look at some of the most common reasons people take out bridging loans.

Buying properties at auction

If you’re planning to buy a property at auction, you’ll need funds quickly. If your bid is successful, you’ll probably have to pay the deposit on the day. The full amount of the property will usually be due within 28 days.

Securing a mortgage would most likely take longer than this. So, a bridging loan is a great solution in this scenario. In this situation, a remortgage or sale would usually be the exit strategy.

Property renovation

You may want to buy and renovate a dilapidated property. However, you might have been denied a mortgage as the provider deems the property to be uninhabitable. In this case, you could secure bridging finance to renovate the property back to a mortgageable state.

In this scenario, the exit strategy will most likely be a remortgage or a sale.

Denied a mortgage

If you have an adverse credit rating or no income, you may have been denied a mortgage. This is frustrating when you know that your credit or cash flow problems are going to be resolved soon.

In this situation, you can take out a bridging loan to enter the property market. Your exit strategy would then usually be to switch to a mortgage when possible.

Denied a secured loan

If you’re planning to renovate a property and then borrow against the increased value, you may have applied for a secured loan. If this loan has been denied, then you can apply for a bridging loan instead.

The exit strategy would be to remortgage the property based on its new value, after it’s been renovated.


The Steps Involved In Securing Bridging Finance

Know your exit strategy

This usually involves a sale or a remortgage. If it’s a sale, proof of an offer will strengthen your application. If you’re planning to remortgage, then having an agreement in principle is a strong exit strategy. You should also have the paperwork as evidence.

Consult a bridging finance broker

Securing a bridging loan by yourself is very difficult. You should consult a bridging loan expert to get a good deal quickly. A broker like Loan Corp will guide you through your application and give you access to hundreds of specialist lenders.

Submit an application

Your broker will check that you’re eligible and that your asset is enough to secure a loan. They’ll then help you with all the paperwork and submit your application to a lender. You then won’t be waiting long for your loan to be approved and your funds to arrive.

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What Are The Eligibility Criteria For A Bridging Loan In Northern Ireland?

The eligibility criteria for bridge loans vary depending on the lender and tend to be flexible. Loans are usually granted on a case-by-case basis. However, meeting certain criteria will give you access to the best rates offered by most lenders.

The criteria that lenders look for in Northern Ireland are the same criteria that lenders in the rest of the UK look for. Let’s examine some of the most common eligibility criteria.

Good security

Usually, the security in a bridging loan will be an existing property. It needs to be desirable so that the lender can sell it if you fail to repay your loan. The lender will consider things such as its build type and location.

They’ll also look at factors that might make it less appealing to buyers. This includes things like leaseholds and non-standard construction.

Strong exit strategy

If you don’t have a solid exit strategy in place then it’s unlikely you’ll be approved for a bridging loan. The lender will ask to see evidence that you can either sell the property or remortgage it in order to pay off the loan. The better your plan, the better rates you’ll receive.

For property developers, lenders will want to see proof that you’re able to complete the work. They’ll also want to be assured that the renovation will raise the right amount of capital.

Property experience

If you have no experience in property this doesn’t mean you’ll be denied a loan. There are plenty of lenders who are happy to grant loans to first-timers. Still, having a proven track record in property will make it easier to get a bridging loan. It’ll also give you access to better rates.

Good credit

An adverse credit rating doesn’t mean you can’t get a bridging loan. Most lenders will still give you a loan if this credit rating doesn’t affect your exit strategy. However, many lenders will give you better rates if you have good credit.

Healthy deposit

The majority of bridging loans have a loan-to-value ratio of 70-75%. However, if you can put down a larger deposit you’ll get better rates on your loan. As with other loans, including mortgages, the most favourable rates begin at 40% LTV.


What Are The Different Types Of Bridging Loans In Northern Ireland?

Regulated and unregulated loans

Getting regulated and unregulated bridging loans in Northern Ireland is possible.

Regulated bridging loans are available to anyone that requires funds for a residential property that they either live in or plan to live in. Regulated bridging loans are regulated by the Financial Conduct Authority.

This gives the borrower protection against mis-selling, bad advice, and other things.

Unregulated bridging loans are not subject to the same rules. This means lenders are less restricted in who they lend to and the terms they use.

Open and closed loans

Open bridging loans don’t have a set date by which the loan must be repaid. This makes them a very flexible option for borrowers.

Closed bridging loans do have a set repayment date which is agreed upon before the loan is granted.

Lenders still require a strong exit strategy for both types of loans.

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How much deposit do I need for a bridging loan?

The majority of lenders will ask you to pay a deposit that covers at least 25% of a property’s value.

This means that the loan will cover the other 75% of the value. However, you can apply for 100% LTV bridging loans from many lenders.

What documentation is required for a bridging loan in Northern Ireland?

In Northern Ireland, lenders require the same documentation as in the rest of the UK. This includes:

  • Proof of address
  • Identification documents
  • 3 months of bank statements
  • Evidence of liabilities
  • Evidence of assets

Can I pay off my bridging loan early?

The majority of lenders don’t charge exit fees if you want to pay off your bridging loan early. This is one of the reasons bridging loans are so flexible. As bridging loans accrue interest, paying them off early can save you money on interest payments.


Final Thoughts

So, securing a bridging loan can be more difficult in Northern Ireland than in other parts of the UK. However, if you consult a bridging loan broker, you’ll still be able to find a lender with favourable terms.

Bridging loans are ideal in lots of different circumstances. They’re particularly useful for those who want to buy a house while waiting for their home to be sold.

They’re also very flexible, and as long as your exit strategy is solid, things like adverse credit shouldn’t affect you.

This makes bridging loans a great option for people all over the UK, including Northern Ireland.

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