Bridging Finance
When faced with temporary financial gaps, accessing funds can be crucial for buying, building or renovating your home. That's where bridging finance comes in.
Every bridging finance scenario is different, and we recognise that a one-size-fits-all approach won't suffice.
As your bridging finance broker, we can build flexible and tailored bridging loan solutions that align with your circumstances.
What is a bridging loan?
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Bridging finance is short-term lending that enables people to buy a new property or land that a mainstream mortgage may not allow. Regulated bridging loans are authorised and regulated by the Financial Conduct Authority and are generally repaid within 12 months.
Unregulated bridging loans are more flexible and can take up to 15 months to be repaid. Other forms of short-term financing include secured loans, personal loans, remortgages and Let-to-Buy.
If you’re unsure about which form of finance will suit your circumstances, our team of bridging loan experts can help.
What are the different types of bridging loans?
Two types of bridging loans exist in the UK:
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Open bridging loan
An open bridging loan typically has no fixed repayment date but is normally fully repaid within 12-15 months. That flexibility means that an open bridging loan is more expensive.
Open bridging finance solutions can help people who are looking to buy a new property before their existing home has sold.
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Closed bridging loan
A closed bridging loan does come with a fixed repayment date and therefore costs less.
This form of bridging loan can also help clients who have exchanged contracts but have not yet completed.
No matter which form of bridging finance you choose, you will be expected to demonstrate how you will repay the short term loan within the timeframe.
Our team can compare bridging loans to identify those that will suit your circumstances.
What can I use bridging finance for?
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There are many reasons people get a bridging loan.
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Chain fixing
A bridging loan can quickly fix a broken property chain, helping you to proceed with your property purchase plans with minimum disruption.
Investing in a Buy-to-Let
Bridging finance enables property investors to buy a home that is ready to 'flip' for a profit, or act as cash buyers.
Property refurbishment
Funds for you to refurbish your existing property before selling or to improve a property you have bought before moving in, makes selling easier or moving more comfortable.
Downsizing
If you are looking to downsize or move to your dream retirement home before you have sold your current residential property. A bridging loan can also fund your moving and selling costs.
Property development finance
You can finance your self-build with a bridging loan while you stay in your current house until the new home is ready.
Auction finance
If you’re looking to buy a property at an auction, being able to get a bridging loan can help complete the sale within a much tighter timeframe than a standard mortgage would allow.
No matter your circumstances, as your bridging broker, we provide expert guidance at every stage of the bridging loan process to secure suitable property finance.
First and second-charge bridging loans
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Your bringing loan lender will also put a ‘charge’ on your property. Should you fail to repay the short term loan amount, it allows the lender to recover its money from the property sale. These fall into two categories:
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First charge bridging loan
If you have no other loans secured against your home, the bridging loan lender will place a first charge bridging loan. If you fail to repay the bridging finance, the lender will be given their money first after the property is sold off to pay the debt.
Second charge bridging loan
Lenders apply a second charge bridging loan to clients who already have mortgages or loans secured against the property they wish to sell. Existing mortgage providers must agree to a second-charge loan.
If the bridging finance is not repaid and the property is sold to pay the debt, the mortgage provider recovers their costs first, then the bridging loan lender.
Second-charge loans are often more expensive than first-charge loans, due to the increased risk of the bridging finance lender not recovering their money if you fall behind with mortgage payments.
From initial consultation to structuring the loan terms and ensuring a smooth repayment strategy, we will support you at every stage of the bridging loan process.​
Will a bridging loan lender help businesses?
Yes. Property developers use bridging loans to buy land, while businesses can use commercial bridging finance loans for almost any purpose, from covering overheads to purchasing stock.
It is worth noting that commercial bridging loans come with high interest rates and are only designed for short-term purposes.
How much can I borrow?
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Your credit history and existing financial situation will determine how much you can borrow in bridging finance.
Most lenders offer up to 75% the loan-to-value ratio of the property purchase. If you are seeking a first charge bridging loan, you can often borrow more than a second.
Most bridging loans require a 25% deposit but, like a traditional mortgage, the bigger your deposit, the lower the interest rate.
Our team can help determine the bridging loan amount you can expect to borrow, how much you will pay in interest, as well as supporting you as you secure finance, we can map out an affordable exit strategy that could save money and time.
How much does a bridging loan cost?
It is important to know that bridging loan finance can often be more expensive than other forms of loan, largely because the interest payments are charged per month rather than annually. Open bridge loans are the most costly.
Bridging loan interest rates vary between lenders, but they can range from 0.5% to 2% per month.
Taking out a short-term bridging loan can also incur other costs, including:
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Arrangement fees
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Legal fees
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Valuation fees
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Exit fees (if your loan is repaid early)
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Administration fees
​Getting a bridging loan with bad credit
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There are ways you can improve your credit score, such as paying bills on time and registering on the electoral roll.
Some specialist lenders will consider bridging finance applicants with a poor credit score, though it’s important to know the increased risk means the bridging loan cost will likely be higher.
Finding a bridging loan for you
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Bridging lenders will want to know a lot about you, so it’s wise to be prepared when seeking to secure bridging finance.
You should know how much your existing property is worth, as well as the one you want to buy, and your monthly income and outgoings.
There is a wide range of bridging finance products on the market, with many lenders offering low-interest or interest-free choices. That’s before you get to the small print, which can be more complicated than meets the eye.
That’s where we come in.
Your dedicated team of bridging finance experts
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We know the importance of timely access to funds in bridging finance scenarios. That's why we offer a smooth and efficient process.
With streamlined application procedures and access to a wide network of bridging lenders across the bridging market, we aim to help you secure bridging finance promptly, allowing you to seize opportunities without delay.
Navigating bridging finance can seem overwhelming, but you don't have to do it alone.
Contact us​
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Ready to bridge the gap and unlock new opportunities? Contact us to discuss your bridging finance options.
Email info@yourmortgageroom.co.uk, call 01273 039500 or fill in this contact form and we’ll get back to you as soon as possible.