Get the best bridging finance & advice from the experts
When it comes to Bridging Finance, you want an experienced and honest mortgage broker who has access to the very best deals.
How Does Bridging Finance Work?
When it comes to getting bridging finance for some it can seem a bit scary, but if planned correctly, it doesn’t have to be.
Unfortunately, there are lots of promises made and broken due to the numerous unregulated firms operating in this sector. At Barr Fiunancial we are proud to be a regulated firm who take great pride in transparency, honesty and above all looking after their clients. We’ll always tell you the things you really need to know up front and every step of the way.
Do you have a question about bridging finance?
How does bridging finance work?
A bridging loan is just like a regular mortgage. In fact, it is a mortgage if it is secured on a property!
The term ‘bridging’ is used as it describes the fact it is an interim form of finance until either permanent financing is in place or an exit strategy (i.e. selling) takes place.
Fast Bridging Finance:
Bridging finance can be very fast to get compared to a typical mortgage and has huge advantages when speed is important. The reality is that a typical mortgage is not usually as fast. This is becuase with bridging finance, they are often more converned about the property than you. Whereas, a typical mortgage (both residential and buy to let) the lenders are concerned with both you and the property. Therefore the scrutiny is much nore and therefore takes longer.
The scenarios bridging finance is used for:
Typically bridging finance is used for:
- For properties which are unmortgageable until works have been carried out. Then you can either sell for a profit. Or if you want to keep the property, you can remortage to a buy to let or residential mortgage depending on yuour plans.
- To buy a property without having to sell first. This can be for both residential and investment type properties.
- For property developments.
- For auction properties where you have to complete in a very short time.
If you need to chat to see what is best for you, please reach out to us and speak to one of our experienced bridging loan brokers.
What is a bridging loan?
A bridging loan can seem scary, but its really no different from any other type of mortgage. It is just an interim form of finance until something more permanent has been arranged.
What is the difference a bridging loan and a mortgage?
The difference between a bridging loan and a typical mortgage is that it is specifically designed to have for a shorter period of time compared to a traditional mortgage.
This is fine provided there is a clear plan and strategy. Not that you could, but clearly a bridging loan for 12 months would not be appropriate for a first-time buyer buying their first home.
Equally a developer, or someone buying at an auction who needs finance quickly, intends to turn around a project quickly and move on, is unlikely to want to be tied into a mortgage for 30 years, with penalties to pay off early.
Its all about the context of your plans and making sure the finance is suitable for whatever you are planning.
How long can you have a bridging loan for?
A bridging loan is usually set up for a term of 12 months, however, it is possible to have a shorter or longer term, depending on your circumstances and the lender. Have a good think about what you are planning to do and how long it will take. And importanlty, make sure your plans are realistic as you don’t want unexpected surprises further down the road.
Can you repay a bridging loan early?
If a bridging loan term is set up for a term of 12 months, you can, of course, redeem it early. The whole point of a bridging loan is to repay before the end of the term. But make sure you check individual terms as every lender will have a different policy for paying it off early. Some may need you to give them notice, some might charge a fee or something else. It’s always best to get advice before diving into something.
What if I need more than 12 months for a bridging loan?
If it is likely that your plans will be longer, it is advisable to get this agreed at the outset. Alternatively, choose a lender who is likely to be flexible if you find you can’t redeem the bridging loan in time. Some lenders are much more flexible than others and working with us, we will be able to guide you in the right direction.
How much does a bridging loan cost?
A bridging loan can have multiple pricing points! It’s important that you don’t just read the headline interest rate. Sometimes lenders are guilty of shouting about an amazing interest rate, but then hide hidden costs and fees! Working with an experienced adviser like us who helps lots of clients secure bridging finance, we will ensure these surprises don’t happen and you know exactly what it is you are getting. Above all, we will ensure you get the best deal in the market.
Typical bridging loan costs:
Most bridging lenders charge a lender fee of around 2% of the loan amount which you can usually add to the loan. Of course, this can vary from lender to lender, but hopefully this gives you a guide.
Some lenders will charge a valuation fee, while others don’t. Lenders will also charge you their legal fees which will be in the range of £1,000 to £1,500 but of course, it could be more depending on what exactly you are doing.
Some lenders will have an exit fee! Watch out for these as they can be a nasty surprise if you weren’t expecting this! If you’re not sure what an exist fee is, don’t worry lots of people don’t either! In simple terms an exit fee, is a charge for repaying the bridging loan! Don’t worry lot’s of lenders don’t have this. Although, some do ask for one months notice.
Bridging lenders may also have additional fees and costs to cover various scenarios, so make sure you look out for these. The trick is to always look very closely at the small print to see what you are signing up to before you commit to anything.
At Barr Financial we only work with bridging loan lenders who we know well and have a good relationship with. There are a lot of new and untested bridging loan lenders popping up and it is important to always work with a partner who has a good and reliable reputation. Rememeber, there are a lot of unregualted players in this market, so you have been warned!
What are Bridging Finance Rates?
Bridging finance rates can vary a lot and pricing is not as transparent as other mortgage products.
As a result, it is common to see prices quoted at very low levels, but later when the deal is progressing discover the lender finds a reasons not to give you the ‘headline rate’ but offer something else! At which point it is too late or will take too long to find an alternative deal.
At Barr Financial we only work with bridging finance firms who we know and are honest and transparent. When it comes to bridging loans we know its critical to work with good and reliable lenders. A realistic cost for bridging finance is between 0.5 – 1% per month but it can be higher if there is more risk involved. Of course rates are alsways changing, and it’s best to get in touch to find out what the current rate are. Get in touch with an expert.
How long does it take to get a bridging loan?
We have managed to secure a bridging loan in 9 working days from the date of first inquiry to funds being in the client’s bank account.
A bridging loan is a very fast way to raise finance. The speed is completely dependent on everyone in the process moving quickly, so we can’t take all of the credit!
The process generally involves these key elements: Initial assessment and documentation. Research and submission of your application. Assessment by the lender. Some form of valuation/property assessment. Legal work. If this is done quickly by everyone, then it can be turned around very fast.
Service that’s about smiles not sales
We may be mortgage brokers, but we’re not a bunch of bankers! We are independent which means we only work for you. Our team are incentivised not on sales, but providing the best service for you.
- We assess
- You instruct us
- We research
- We find the best deal for you
Agreement In Principle
- You agree to the deal
- We submit the first stage of your application
- You get an agreement in principle
- We submit the second stage of your application
- We present your application in the best possible manner
- They assess your situation
- We support you throughout the process
- They assess your property
- You receive your mortgage offer
- Technically our job is done but we also like to help
- We liaise with solicitors and estate agents
- We keep you updated
- You achieve your goals