Compare Bridging Loans

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Bridging Reviews

  • I almost gave up, then I found Propp

    When I thought there was no way I was going to be able to find a way to borrow some money I found Propp. I can't speak more highly of them, I just would have given up without Paul. Thank you for everything.

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  • Great experience for a first timer

    This is the first time I've used bridging finance to help fund two property purchases and the overall experience was very smooth. All being well, I'm expecting to be back again very soon.

    Read More
  • Absolutely fantastic company

    Absolutely fantastic company. I couldnt find any lenders that could compete with the time scale and the price. Huge thank you to Peter and Tef in the daily support I received from both of these guys was out standing.

    Read More
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What is a bridging loan?

A bridging loan is a form of finance taken if you find yourself in a position where you need to raise finance quickly and flexibly. It’s a short-term loan, a temporary mortgage secured against a property, when the loan is intended to be held for a short period, usually between just a matter of weeks up to 24 months.

Like a traditional mortgage you will need to put down a deposit (or have equity in the property if you are refinancing) however some lenders will accept equity from other property to help reduce the cash deposit needed. Fees will usually be charged by the lender when the loan starts, and interest will apply while you are borrowing the funds.

What is a bridging loan used for?

Our clients usually come to us to source bridging finance when they need access to property finance more quickly than a standard mortgage can provide.

Bridging finance was originally created to bridge the gap between selling your home and buying a new one, however bridging can now help raise finance against a property for a variety of reasons:

  • You’re buying a property and the buyer of your existing home has pulled out or the chain has broken
  • You’ve found a great deal or a rare opportunity and you need to close quickly
  • You’re buying a property at auction and need to pay for it within the 28-day deadline.
  • You are buying a property that needs refurbishment but can’t obtain a traditional mortgage because high street lenders and valuers won’t approve an application. For example, there is no working kitchen and bathroom in the residential property.
  • You raise funds quickly against a mortgaged property you already own with good equity in it by using a 2nd charge bridging loan. This loan sits behind the first charge mortgage lender.

How does a bridging loan work?

You’ll borrow the money you need to fund your purchase for 6, 12, 18 or 24 months. Due to the flexible nature of a bridging loan, lenders will charge higher interest than they would with a traditional mortgage. Therefore, borrowers will want to consider how quickly they can repay the bridging loan. You may plan to refinance or remortgage the property to clear the loan, or the property may be sold to repay the bridging finance. Alternatively you may have funds being raised elsewhere to settle the finance.

The loan is secured against the new property, so if you fail to repay the lender could repossess the property.

How much can I borrow with a bridging loan?

Our lenders offer loans from £50,000 to £15 million. The amount you're eligible for will depend on the value of the assets you already hold and your income.

You’ll usually only be able to borrow a maximum LTV (loan-to-value) of 75% of the value of the property. However if you have lots of equity in your residential home, or across your property portfolio, you may be able to leverage this by allowing the lender to mitigate their risk by cross-charging, i.e. applying a charge to another property. Some scenarios allow our clients to borrow 100% of the purchase price or property value.

How much does bridging finance cost?

Because it’s a short term loan, a bridging loan interest rate is typically higher than you’d find on a standard residential mortgage. The rate is a monthly one rather than an annual loan and range from 0.39% to 1.5% per month, depending on the lender.

There are usually additional costs to consider, including a product fee and an exit fee if you are able to close the loan facility early. Despite this, it usually works out cheaper to exit the loan earlier as you avoid accumulating more interest.

Lenders will often charge the interest upfront, effectively deducting the expected interest from the loan advance, and if you repay the debt earlier then they will refund that interest back to you. This is commonly called retained interest. Some lenders will allow you to service the interest, so you make monthly interest repayments to the lender, although this is a less common scenario.

How quickly can I arrange a bridging loan?

We have been able to get bridging loans agreed in a matter of hours and funds released within days. More often we would expect an application to be competed in 2-3 weeks however you should be advised how long your situation is likely to take.

In the case of most bridging loan applications speed is a key factor. Lenders and brokers should be geared up to make the approval process as quick as possible, including electronic identification, automated property valuations, and electronic signatures.

Why should I compare Bridging Loans?

If you’ve got this far then there are probably some key reasons why you’re considering bridging finance, with speed and flexibility usually high on the list.

Bridging finance is more costly than a traditional mortgage due to the short-term nature of the loans, but it’s an invaluable tool in an investors box when a deal is bound by time restrictions.

With this in mind it’s important you conduct a bridging loan comparison to make sure you get the best deal possible to prevent you from paying over the odds.

Propp makes it easy for you to perform a fast bridging loan comparison and this will help you compare bridging loan costs, specifically the interest rate, the bridging lender’s product fee as well as comparing the overall cost of bridging loans.

How do I compare Bridging Finance?

With our comparison tool, you’ll need to know just three things:

  1. How much you want to borrow
  2. How much the property is worth
  3. How long you’ll need the bridging loan for

Now just plug those numbers into our bridging loan comparison tool and we’ll show you which lenders offer the best rate for your circumstances.

It’s important to remember though that the bridging loan rate is not the be all and end all. Dependent on your circumstances, you’ll need to factor in fees, exit agreements and lender flexibility. Cheapest is not always best.

How can I save money on my Bridging Loan?

When you use Propp’s Optimiser service you are able to compare bridging loans with rates and fees that have been negotiated based on your specific deal. The property expert that helps optimise the deal will also help you compare bridging lenders based on factors more than just the interest rate. For example, the best bridging loan interest rate that you’re offered may not be right for you, especially if the Propp expert explains that a lender is not currently providing fast turnaround times.

How do I choose which Bridging Lender to choose?

The best product for you will always depend on your individual circumstances and a property finance expert will support you to make this decision, but here are a few examples that explain the strengths of a few of the lenders on our panel.

A borrower may choose a Together Money bridging loan because at that time the lender was flexible around the borrower’s adverse credit which another bridging lender had been unwilling to lend on.

Alternatively, a bridging loan application may be placed with United Trust Bank because the Propp expert explained they would qualify for a fast track bridging option when speed was the biggest factor in the deal.

Masthaven Bank bridging finance might have been offering a very low bridging loan rate as well as a quick decision which the borrower was happy with, weighing up speed and price.

If a borrower was concerned about arranging the exit finance to pay back the bridging loan then they may be interested in the Precise Mortgages ‘Refurbishment Buy to Let’ product. This option provides the landlord with firstly the bridging loan and also the exit refinance of a long term buy to let mortgage once works are completed, offering day 1 reassurance and greater certainty of paying back the bridging loan.

Without having direct experience dealing with bridging lenders the borrower needs to be able trust the experience of the property finance expert helping compare and arrange the bridging loan. At Propp we make the bridging loan comparison simple and transparent and you can rely on having an expert working with you from start to finish.

Bridging
Loan FAQs

A bridging loan is a short-term loan that allows you to bridge the gap between selling your current property and buying another one. Bridging loans are typically taken out for around six months, but in some cases can last for up to 12 months. When finance is only required for a short period of time, they can provide the cheapest option for raising the funds you need. Their biggest selling point: they’re quick to arrange, have flexible lending criteria so that approvals can be given quickly, and they can be secured on all types of property, including property that other bridging lenders may decline.
If you're looking to move house, but haven't yet found the perfect new home, you may find yourself stuck in limbo while you wait for your current home sale to go through. But if you have enough money saved up to cover the deposit on your next property, why not use it as equity? Bridging loans allow you to do just that. You'll be able to take out a loan against the equity in your current property, then use this cash as deposit on your new home. Once this is done, you'll have enough money in hand to cover all costs associated with moving into your new place - including solicitor's fees and stamp duty!
A bridging loan works by giving you the money to proceed with a purchase while you free up money from other assets / investments or secure a long-term finance plan, such as a buy-to-let mortgage. They're a handy way to access short-term cash injection, while you put a more sustainable plan in place or liquidise assets.
Bridging loans can help with various situations, meaning that it is often used for multiple reasons:
  • Chain break finance
  • Property refurbishment
  • Re-Bridging
  • Property Auctions
  • For quick purchases when a bargain property comes along
  • Buying property below market value
  • Repossession prevention
  • Property development
As with all types of loans, bridging loans do come with benefits and risks:

Pros of bridging loans:

  • Quick to arrange.
  • It is possible to borrow very large sums of money.
  • Flexible repayment terms.
  • It is possible to secure lending on properties where some high street lenders may not.
  • Can be arranged as a 2nd or 3rd charge.

Cons of bridging loans:

  • Bridging loans are a secured way of borrowing, so this means that you’ll need to put up an asset against the loan. If you are unable to repay the bridging loan, you risk losing said asset.
  • They are unregulated (borrowers have no recourse to the protection of the FCA).
  • Higher interest rate.
  • Bridging loans can come with a range of fees.
Bridging loan rates tend to be higher than longer term loans such as mortgages as you are paying for the advantage of borrowing a large sum of money quickly. As bridging loans tend to be short term, their rates are usually given on a monthly basis, rather than a traditional annual percentage rate (APR). Bridging loan rates typically range from 0.75% to 1.45% for residential bridges, and 1% to 1.95% on buy-to-lets or houses in multiple occupation (HMOS).

Unlike a residential mortgage there are 3 ways that the interest on a bridging loan is charged.

  • Monthly – Similar to an interest-only mortgage where you pay the interest payments each month and they are not added to the loan.
  • Rolled up interest – Interest is simply calculated up front and added to the balance of the overall loan.
  • Retained interest – The borrower also borrows the interest payments due on the loan, when the finance is taken out. This money is then ‘retained’ by the borrower who uses this to cover the monthly payments. Most bridging loans are calculated this way.
It is calculated by adding the Net Loan Amount and the interest. This number will change depending on term length and if the interested is paid monthly or rolled up.
Like with any forms of borrowing, there is a certain amount of risk. However, bridging loans are a great short-term option to help with plugging a financial gap.
The amount of time it takes to get a bridging loan approved differs from one lender to the next. It will also depend on your individual circumstances. Although it is not unusual for bridging loan providers to approve applications within 24 hours, it can take between two and four weeks for a bridging loan to get paid out once an application is approved.
A bridging lender will consider using any type of property for security, including residential semi-commercial, commercial and land. This means a lot of options, such as:

  • A new residential property, commercial property, investment or trading property
  • Buy-to-let purchases
  • Quick completion of a property purchase
  • Auction purchases with pre-auction bidding facilities agreed
  • Housing developments
  • Barn conversions
  • Refurbishment projects to sell on for profit
  • Building your own home
  • Un-mortgageable properties
  • Buying before selling
  • A short-term solution for cash flow problems
Yes, a few high street banks offer bridging loans. However, as bridging finance is a form of short-term specialist finance many of these are only available through specialist banks, challenger banks and specialist bridging lenders. You should also use a specialist bridging broker who has extensive knowledge of the market to ensure you’re getting the best possible deal.
In order to get a bridging loan, you’ll need:

  • Good credit - you’ll have to pay the bridging loan back so quickly, so your bridging lender will want to see that you to have an excellent credit rating.
  • Strength of the asset – like a residential mortgage, the bridging lender will want to check that the property you’re buying doesn’t have any significant problems.
  • Exit strategy: a plan for how you’re going to repay the bridging loan.

The bridging loan application process looks a bit like this:

  1. Make an application online
  2. The bridging loan lender runs a credit check
  3. The lender accepts or rejects your application
  4. Valuation and lender checks take place
  5. Funds reach your account
Yes! Bridging loans can be used for a deposit on a property. Bridging loans are often used by those who are stuck in between the purchase of a new property and the sale of their current one. This means that you can move forward with purchasing your dream home without delays with selling your existing home. The bridging loan can then be repaid once the existing house is sold.
There are a few options for short-term loans that might help with bridging the gap between buying and selling a property, or act as a temporary solution to fund other projects. Here are some of the other options:

  • Borrowing more on your mortgage
  • Secured loan
  • Unsecured loan
  • Savings or a family loan
  • Property development finance
  • Refurbishment loans
  • Commercial mortgages

Again, with any type of borrowing, you should always read the terms closely and consider and compare:

  • the bridging loan rate and the annual percentage rate (APR), which includes fees
  • how much you’ll repay in total, over the lifetime of the loan
  • any penalties for missed, late or early repayments, or set-up fees at the outset

Bridging Loan News

Our free deal optimiser saves our customers on average £8761

ALL PRODUCTS DISPLAYED ON THIS PAGE ARE FOR UNREGULATED PRODUCTS ONLY. SHOULD YOU REQUIRE A REGULATED LOAN PLEASE CONTACT US. AS A MORTGAGE IS SECURED AGAINST YOUR PROPERTY IT COULD BE REPOSSESSED IF YOU DO NOT KEEP UP THE MORTGAGE REPAYMENTS.
COMMERCIAL MORTGAGES AND SOME FORMS OF BRIDGING, DEVELOPMENT AND BUY TO LET FINANCE ARE NOT REGULATED BY THE FINANCIAL CONDUCT AUTHORITY.

* Total savings achieved since November 2020 based on annualised interest rate saving where deal optimiser service negotiated a lower rate than lender’s published rate.