How do I get a Bridging Loan?


Author: Myles Robinson - Advisor

Posted: Nov 15, 2020

Bridging loans provide a short-term financing option used by developers or landlords to ‘bridge’ the gap between the purchase and sale of properties.

When the time to pay the mortgage is tight, bridging loans offer a solution more quickly than other types of loans.

A bridge loan resolves cash flow problems for property buyers because they:

  • Offer loans of £25,000 and above
  • Provide flexible financial terms, from 1-36 months
  • Offer finance that is accessible within a quicker timescale than a mortgage
  • Provide up to 80 per cent loan-to-value (LTV) ratio

Moreover, bridging loans are appealing as they:

  • Charge low arrangement fees which are usually 2 per cent of the capital borrowed
  • Allow the interest owed to be rolled up to the end of the term if you don’t want periodic payments.

Bridging loans cater to several needs and are appropriate for a range of circumstances. For example, it is essential for those who require urgent money to purchase their dream home, wish to downsize, need money to extend their leasehold, or buy a property through auction.

Here is how to get a bridging loan:

It may seem that visiting your bank is the first logical step to getting a bridging loan. However, this is not the case. The days a bank would have given you a short-term loan because you are a trusted client are long gone.

Nowadays, the issuance of short-term loans on residential and commercial properties is regulated, which is making street lenders withdraw from the market. The rise in development loans is also becoming more popular for private lenders.

You will need to hire a bridging finance broker who will arrange the bridging loan on your property. Bridge loans are available from specialist bridging loan lenders: more than 200 offer this type of funding.

For proactive purposes, you are required to seek advice from a specialist before getting a loan that is secured against your property as collateral. This is where a bridging loan broker comes in.

How to find the best bridging loan

Bridging finance lenders have expounded on their offerings for the past two years as financial-related crises have made building societies and banks more choosy when it comes to mortgage lending.

While it is possible for someone to apply for a bridge loan directly from companies such as our lender panel, professionals recommend hiring a qualified mortgage broker to get the best deals.

Can you get a bridging loan deal?

The difference in interest rates or costs between different providers is significant. Moreover, some bridge finance lenders such as Yorkshire Bank are only accessed via a limited number of mortgage brokers, which means you might not access lower rates if you decide to go solo.

Get a bridging loan quote now:

A personal recommendation from your colleagues or friends is a bonus. However, most developers and landlords hardly use bridge finance more than once in their lifetime.

Therefore, not many of them will have sought the services of an experienced or qualified mortgage advisor in bridging finance.

There are mortgage brokers whose speciality is to find property finance for specific borrowers such as the crew of superyachts or layers, but advisors like Loan Corp have dealt with bridge finance cases and will look for the most viable solutions for your situation.

The process from end to end from Loan Corp was fantastic, I highly recommend them to anyone for bridging loans.

Jamie Aarons

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