Bridging Loan FAQS

A Bridging Loan is a short-term finance product, designed to bridge the gap until an asset can be sold or until longer term finance can be arranged. Learn more >

Bridging Loan FAQS

How much can I borrow with a Bridging Loan?

Bridging Loan lenders may lend up to 75% on a single asset, this can be more if there are other assets that can be included as security for the lender. For example, if you have other properties that you are willing to incorporate into the deal.

What will my monthly payments be if I take out a Bridging Loan?

Most bridging lenders will be comfortable retaining or rolling the interest payments, which means deducting them from the loan or adding them to the loan. This can help with short-term cash-flow. You can also choose to make monthly payments, called ‘servicing the debt’ which will be based on the agreed monthly interest of the Bridging Loan.

How much deposit do I need for a Bridging Loan?

For a Bridging Loan, the minimum deposit on a single asset or property is usually at least 25%. This can be less if you are willing to include other assets in the deal for the lender to take security on.

What’s the process to apply for a Bridging Loan?

The first step to apply for Bridging Loan would be to find the right lender who may be willing to lend to you, and who has confidence in your proposed project. The next steps would involve:

• Initial enquiry and formal application

• Agreement in principle with terms and conditions

• Lender due diligence (borrower checks, valuations)

• Formal loan offer and acceptance

• Legal documentation

• Completion of the loan

• Repayment of the loan via your exit strategy

How do I pay the Bridging Loan off?

Once you have the cleared funds to pay off your Bridging Loan you can usually contact them directly to repay this once you have sold the asset. If you are arranging longer term finance this will usually be done via your solicitor. It’s worth noting that some lenders may have an ‘exit’ fee to pay.

How long will it take to arrange a Bridging Loan?

By their very design, a Bridging Loan is designed to be arranged very quickly. The average Bridging Loan takes around 1-2 weeks to complete in our experience.

What fees will I need to pay when I apply for a Bridging Loan?

Typical fees for a Bridging Loan include:

• Valuation fee

• Arrangement or facility fee (can usually be added to the loan or deducted from the advance)

• Legal fees

Can I borrow using a Bridging Loan over multiple properties?

Yes, you can usually get a Bridging Loan over multiple properties. This involves getting the Bridging Lender to cross charge or take a ‘comfort’ charge on another asset or on a portfolio of properties.

What type of properties can a Bridging Loan be used on?

For a Bridging Loan most property types can be considered these include, houses, pubs, restaurants, shops and even land. This can also include any properties that might be considered unmortgagable by mainstream lenders.

What are the risks of taking a Bridging Loan?

As with any financial commitment there are risks associated with Bridging Loans. These include not being able to execute your exit strategy and overrunning the original term of the Bridging Loan. In this instance, lenders may be able to charge you penalties, higher interest rate or even repossess the asset. This means it is important that you consider your options very carefully and also take independent legal advice.

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