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What is a Bridging loan?
A bridging loan is a form of short term finance. It’s normally secured on property and can be useful in a wide variety of situations.
The reason short term property loans are termed “bridging loans” is that they provide a bridge between two points – where you are now and where you want to be.
Bridging loans are therefore short term, typically up to 12 months but sometimes longer where there’s a definite need.
The gap being bridged could be then repaid, normally by refinancing the property or selling the property.
A bridging loan is much faster to arrange than a normal mortgage so – where speed is of the essence, choose a bridging loan.
We’ve been arranging funding since 1997 and, if you’ll forgive us for boasting but we think we’re quite good at it!
In fact – 7 x UK Best Broker Awards back us up in that assertion, so does our 5 star customer feedback.
So -for your buy to let mortgage needs, or anything else funding – make sure you use a broker you can trust.
What can I use a Bridging loan for?
The range of uses for a bridging loan come down to 3 main categories, speed, inability to raise a mortgage, intention to repay quickly;
- The need for speed;
- Auction purchases which often have a 28 day completion window.
- Negotiating a purchase based on a “cash” price.
- Fitting in with external factors.
- Problems getting a mortgage;
- The property might not be suitable for mortgage without refurbishment work.
- You might prefer to make alterations before mortgaging the property.
- You may need to improve the Energy Performance (EPC) before the property can be let.
- Plans to repay quickly
- “Flipping” the property – selling soon after purchase being refurbished or just having time to make the sale.
Alternatives to a Bridging Loan
A bridging loan is useful for the situations shown above and for many other circumstances, but are there are alternatives which will fit for some situations;
- Minor renovations and refurbishments to buy to let properties can sometimes be funded within a mortgage, saving refinance costs.
- Where a portfolio of properties is being refurbished, renovated or other recurring spending over a period of months, a revolving credit facility could be a lower cost option.
How to get a great bridging loan
As with any finance product, the quality of the bridging loan you get is directly related to how good a case we can put together for your bridging application;
- The applicants;
- Your experience and ability to complete any works.
- Financial situation.
- The plan;
- Are your plans for the property feasible, legal and costed?
- The exit (repayment) plan;
- For a remortgage, will a mortgage be available?
- Is the finished value (GDV – Gross Developed Value) realistic and rent (if applicable) sufficient?
- For a planned sale is the finished property able to be sold in a realistic time?
Contact us now on 0808 164 2364
Acorn.finance – 4th Floor, Silverstream House, London. W1T 6EB