Bridging Loans
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Bridging Loans
Bridging Loans
Bridging loans are short-term loans. Borrowers use them to bridge a gap between purchasing a property and receiving funds from another sale. Suitable for property developers and residential purchasers alike, a bridging loan for property is useful when you need funds rapidly.
What Can Bridging Loans Be Used For?
A Bridging loan can be used to purchase a property that is un-mortgageable or a borrower requires funds quicker than traditional lending. Like at a property auction. Furthermore, no income is required for the loan and no age limit.
Madison Carter Finance can offer you a high-quality bridging loan to meet your needs.
Bridging Loan For Property Development
Bridging loans for property development are some times search for as property bridging loans. This applies to residential and commercial properties. Bridging finance can provide funds for properties that aren’t mortgageable by standard borrowing.
How Much Can I Borrow?
Typically you can borrow up to 60-85% of the value of the property and up to 60% of the land value and 100% of ‘costs’ can be fully funded by the bridging loan.
For new build schemes, building out the ground, a development finance facility is likely to be more appropriate.
What Are The “Costs” Involved?
The costs involved will always vary between asset classes.
You may need to finance a permitted development (Office to Residential) scheme. A bridging loan is the ideal solution in this scenario.
Alternatively, you may be carrying out heavy or light refurbishments on a property. This may require you to pay off the first charge lender (say, Halifax). Again, a bridging loan is the perfect option.
If you are buying a property to refurbish it, you can obtain 100% of the funding for your build costs.
How Does It Work?
Here is an example scenario to demonstrate how it works:
You buy a property with a loan to value (LTV) of 70%. Your schedule of works comes to £300,000. You finalise the transaction then begin work using your own funds. An asset manager or QS will asset the site after the first month of work. They will confirm how much work is now complete. The amount of funds agreed at the start of the facility is then released. It’s even possible to get a refund on works carried out during the first month depending on your lender’s criteria.
Can I Use A Bridging Loan For Buying Land For Development?
Although a bridging loan is an option if you are buying land, you will find the LTV is restricted. The majority of property developers have an option agreement with the landowner. When planning permission is granted, the land benefits from a gain in value. Therefore, it’s possible to have better leverage on such sites. This makes a development finance facility a better option in this scenario.
Why Is A Development Finance Facility A Better Option?
A development finance facility uses Gross Development Value (GDV) and not Loan To Value (LTV).
LTV is a metric that supports the value of an asset that has already been created. On the other hand, GDV relates to the development’s value after the asset is complete. For this reason, GDV is typically used for new build developments.
To get a more accurate quote for your property development check out our bridging loan calculator.
Bridging Loans For Residential Property
If you are buying a residential property or are adding value to one through property development, bridging loans for residential property are ideal for you. This type of bridging finance is suitable for any type of residential project. It could be either a single dwelling or an HMO development scheme.
Residential bridging loans are also available for a wide range of properties including unmodified and unmortgageable units.
Bridging Loans For Commercial And Residential Real Estate
If you need short-term finance to fund a residential or commercial real estate project, a bridging loan is the ideal solution. Typically, we arrange funding for residential property with a commercial angle and this type of loan is suitable for both individuals and property developers.
However, this marketplace is an especially competitive one. Therefore, in this live market, bridging loan lenders change their appetite for deals on an ongoing basis. With this in mind, it is always worth getting in contact with our team to get the best possible product for your needs.
What Is Bridging Finance?
Bridging Finance is just another way of referring to Bridging Loans. Some people even call it short term finance. We discuss that further on that article as there are many types of short term finance which arn’t bridging loans.
Madison Carter Finance can supply you with high-quality Bridging Finance that will deliver the short-term funds you need. With the right Bridging Finance product, you will have cash rapidly at your disposal to enable you to take speedy action.
Bridging Rates
Bridging Rates vary depending on a number of factors. These include the:
- Type of asset.
- Loan to value.
- Overall loan size.
- Profile of the sponsor or borrower.
To find out more about the full costs of a bridging loan we have created a separate article to give you further information.
Property Bridging Loans In The UK
Property bridging loans are secured loans against a property. Typically, you have a loan to value of 65-85% and have a first charge and/or a second charge loan. If there is a second charge it will sit behind the first charge.
The property bridging loan market is a rapidly a moving one. Lenders compete on LTV (loan to value), Rates, and Speed. The product you eventually choose will depend on your personal circumstances. Get in touch to get the help you need to find the best product to meet your requirements.
There are many types of bridging loans offered by a wide variety of lenders. One example many people are aware of is Silicon Valley Bank that offers business bridging loans to startups that are between rounds. However, we operate only within the real estate sector with property bridging loans.
If you need short-term funds to complete a project, bridging loans in the UK are a speedy and efficient solution with us. There are many lenders who can provide high-quality bridging loans in a short timeframe.
As bridging finance is a versatile form of borrowing, it is ideal for funding a range of UK-based projects.
Fastest Transaction
3 working days from submission to the lender
Largest GDV Advised On
£75m
What Can You Use Bridging Loans For?
How To Use Bridging Loans
There are many ways in which you can use a bridging loan. Here are just a few common examples:
Bridging Loans For Residential Property
If you are buying a new property and selling your existing one simultaneously, problems can arise. Many things can go wrong during both processes. That can lead to stressful situations and, potentially, financial pressures. If you take out a bridging loan you can buy a new property while waiting for your existing one to sell.
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