LEADING UK BROKER FOR

Bridging Loan Broker

A bridge loan is a short-term financing product that helps connect one property transaction with the next.

LEADING UK
BROKER
FOR BRIDGING
LOANS
SINCE 2004

A bridge loan is a short-term financing product that helps connect one property transaction with the next. Where to start is a question that plagues many, and that’s where bridging loan brokers come in. Bridging loan brokers make the process of looking for a bridging loan much more convenient. They act as intermediaries between you and any lenders that may have what you need.

At Tiger Financial, we pride ourselves on being knowledgeable about all aspects of financing for your growing small business needs. With 17 years of experience, we are experts in commercial finance and personal finance solutions. We are able to offer the best bridging loans in town with flexible repayment terms and great rates so you can focus on your business instead. Our database has 400 competitive bridging lenders and property development finance lenders that are FCA registered.

We know the market better than anyone, so don’t hesitate to contact us for a consultation. Your success is our business!

How Does a Bridging Loan Work?

A bridging loan is an excellent financial solution that allows property developers to capitalise on emergent opportunities before looking into other forms of financing. With such a facility, they can get the money needed for acquiring or developing properties before leveraging assets as collateral on mortgages and other traditional forms of financing.

Bridging loans provide funding that is typically used for projects or property purchases before mainstream credit funding can be secured. With a bridging loan, you can buy or renovate property without worrying about any gaps in funding, i.e., bridging the gap.

Bridging finance provides a viable “exit strategy” for asset-rich yet “cash poor” investors. You can use this money to fix gaps in financing that can hold up your plans, for instance, getting permits to develop a property or amending titles when faced with new zoning regulations.

You can use bridging finance to acquire a more diverse portfolio of properties where conventional loan products fail. For instance, you may have your eyes set on developing a piece of land that’s either unmortgageable or uninhabitable. Instead of spending your savings or liquidating your other assets, you can leverage those assets, the property to be renovated, or other inventory to bridge the gap between what you want and how much money is available. It’s a great way to turn something that might have seemed lost into an opportunity for growth instead.

Knowing what steps need to be taken can often seem daunting, but Tiger Financial is here every step of the way!

What is Required to Obtain a Bridging Loan?

To obtain a bridging loan, there are a few requirements:
  • Credit score rating: a good credit score gives you better leverage when applying for bridging finance.
  • Proof of identity and residency
  • Valuation report: it confirms the value of your property alongside ownership details, location, defects etc.
  • Exit strategy: how do you intend to pay the loan?
  • A portfolio that shows your experience in dealing with property might be needed. Borrowers without prior experience receive more scrutiny during the evaluation process.
  • Proof of income streams: Some lenders require alternative sources of income as a way to buffer their investment.

Advantages of Working with a Bridging Loan Broker


 

  • They can negotiate better rates as they understand all your options and have a better bargaining position.
  • Brokers keep abreast of the changing currents in the financial markets. The best lenders from a year ago are not necessarily your best bet today.
  • As policy, some lenders will not work with you unless you go through a broker. Therefore, a trusted broker gives you access to even more lenders.
  • Brokers break down the complicated processes for you and ensure that you are well informed of the kind of agreement you’re getting into.
  • Brokers go over your application forms and point out information that could potentially invalidate your request with the lender. 
  • Brokers save you time and reduce the stress of the follow-up process that involves complex legal aspects.

Disadvantages of Working with a Bridging Loan Broker

 

  • Their services are not always free, and some have very high consultation fees. Most people are unaware that there is a whole world of finance brokers out there vying for your business, and some will try to squeeze you for every penny by asking for upfront fees. Luckily, we’re not one of those shady companies!
  • There are chances that you might land on a finance broker who is not very good at their job. This potentially affects your chances of getting the loan, or it could land you a loan with exorbitant interest rates.

Why Should I Seek Out an Experienced Bridging Loan Broker?

 

A bridging finance broker is an intermediary between a borrower and the lender. They advise borrowers on their best option when it comes to loans and work with them throughout the process so that there are minimal hassles in completing what can often be a complicated transaction.

You should always seek out a bridging finance broker to help you find the best bridging loan rates. Why? Well, as we know, lenders all have different interest rates and fees, so it’s essential that your lender is aware of what other options are available for this process to go smoothly. If you go with an experienced bridging loan broker, they can advise you and help you make sure that your final decision aligns with what will work for your situation best. This way, there are no surprises or regrets later on down the road when it might be too late to fix them.

In What Circumstances Can I Use a Bridging Loan?

What are some of the situations in which a bridging loan could be useful? 
 

  • When you purchase under value from an LPA Receiver
  • Purchasing before planning permission
  • Buying at auction
  • Acquiring a buy to let property
  • Borrowing against the value (not purchase price)
  • Development and refurbishment
  • Buying with a deferred consideration
  • Developing an uninhabitable property
  • You wish to split the title
  • When conventional credit like a mortgage is not available
  • You need working capital
  • You want no monthly payments
  • When you need finance fast
  • The purchase of commercial properties

What Types of Bridging Loans Can I Get?

Bridging finance is available in a variety of forms. So, you can always find a product that meets your unique needs at both cost and scale. We’ll shorten our list to the most essential:

Property auction finance:

You can purchase property for a lot less than what it’s worth at an auction. Auction Finance is a type of loan specifically designed to enable individuals to complete an auction purchase quickly. This can be great for people who want to profit from properties that are not being sold on the open market via traditional real estate agent channels. Still, it’s essential that you use this tool correctly so as not to end up in financial trouble.

Residential Bridging loans:


This is a short-term bridging loan, used as an alternative to standard mortgages in urgent situations. It can be used when renovating or securing property within a short time frame.

Commercial bridging loans:

The loan is similar to residential bridging loans in that both users need quick access to funds for the acquisition of property. The main difference is that for commercial bridging loans, the overall use of the property has to be 40% commercial (the property under acquisition needs to be commercial).

Land bridging loans:

Allow you to remortgage or purchase a new piece of land. It also helps you address the hold-ups involved in developing a plot of land when you don’t have all the necessary permits in line.

Refurbishment bridging loans:

If you have a property that needs some sprucing up before it can be put on the market, you can take out a refurbishment bridging loan to give your property an extra boost and make sure that you get the best price. You can repay this loan once the sale is finalised.

Can You Get 100% Bridging Finance?

It is common practice among bridging loan lenders to cap the LTV at 70- 75 %.  However, the property or asset can get 100% bridging finance on its current marketplace value with the following caveat:

A lender will gladly lend 100% (LTV) of the value of your property or asset, but they’ll need you to contribute additional assets as security against risk. This means that if you don’t pay back the loan within a given timeframe, then your property or home may be repossessed.

Do You Need a Deposit to Get a Bridging Loan?

It is not mandatory to put down a deposit since we have lenders that offer 100% bridging finance. However, as stated earlier, most bridging loan lenders tend to cap the LTV at 70-75%. This means that the borrower needs to come up with an upfront deposit of 20-25% of the loan amount required.
The deposit one makes is representative of the borrower’s equity in the property’s ownership. Subsequently, the LTV represents the part of the property that will be put up as collateral.

What Are the Benefits of a Second Charge Bridging Loan?

It is called a second charge loan because it is taken as a secondary (secured) loan on your property. A person may take out this type of loan when they already have a loan outstanding on the property or house for which it was obtained. After taking out a first charge loan, the lender leaves out a small portion of equity, which the second charge lender uses as collateral for the loan amount they intend to offer. This second charge loan does not affect the repayment structure of the original loan.

Below are a few instances where second charge bridging loans can be applied:

 

  • if you need funds faster than you can get using mainstream mortgages and other loan products
  • A second charge bridging loan can also save you from punitive early repayment charges if you are locked into a fixed-rate mortgage. In such a scenario, the second charge loan helps you attend to other financial needs while sticking to the stipulated mortgage repayment schedule.
  • Your credit rating may be affected after taking a mortgage, which would affect your mainstream refinancing options. A second charge bridging loan would be a favourable source of funding in such scenarios.
  • It can be obtained to renovate or flip houses where the process requires more funds than are left over from the initial loan.
  • In some cases, the loan is taken out on urgent emergent issues. For example, the owner might need funds to pay for things like inheritance tax or probate.

Can I Use a Bridging Loan to Buy a House?

Bridging finance is a short-term finance option that can help you when purchasing a property. It allows you to bridge any shortfalls in funds when you want to sell your old house to purchase a new one. This comes in handy, especially when you are struggling to sell your home. In addition, such a loan allows you to move into a new home before you finalise the sale of an old house.

Can Bridging Loans Save My House from Repossession?

Worried about keeping up with the repayment on your mortgage? A bridging loan could be the answer! Bridging loans are short-term and can give you financial flexibility when you’re struggling with your debt and cannot pay the monthly instalments. Further, they allow you to consolidate all debts into one easy-to-manage option.

When mortgage lenders repossess your house, they tend to sell it below market value. If there’s a balance left on the mortgage after the sale of your house, you as the borrower are still liable for those payments. Therefore, if you have some equity left on your house, a second charge loan could buy you enough time to sell your property at market value and get enough funds to make repayments on a mortgage. Alternatively, you could sell another high-asset property that would allow you to make your mortgage payments.

Is a Bridging Loan Expensive?

Comparing bridging finance to other mainstream options is challenging because they are a niche product. However, they are generally more expensive than most mainstream loan products available in the market. They are offered at monthly interests of between 0.5% to 1.5%, which is much higher than the average mortgage. 

On the flip side, bridging loans are intended for clientele that can’t approach banks for a loan. These borrowers bear a higher level of risk for the lenders – this more than justifies the steep repayment rates. Moreover, bridging loans offer financial flexibility in their repayment terms. You can also use them to buy you some more time as you get your priorities in order. After all, it’s hard to put a pound value on the time a bridging loan buys you.

Can I Get a Bridging Loan if I Have a Bad Credit Score?

Yes, you can! Most lenders are primarily interested in the exit strategy (how you plan to repay the loan once the loan term elapses). The real concern is usually how your bad credit affects the exit strategy, which is typically pegged to your collateral. Lenders worry about situations of bankruptcy or repossession. If the exit strategy involves the sale of your property or another high-value asset, you are more likely to secure the loan. Borrowers whose intention is to remortgage their property as an exit strategy are mostly underlooked and may have to seek a specialist broker who deals with borrowers with bad credit (which is highly unlikely).

How Much Does It Cost To Get a Bridging Loan?

 

There are several charges involved when acquiring a bridging loan. The total cost of acquisition is pegged on factors such as your credit history, repayment time frame, the value of your collateral, as well as the LTV of your property.

Here are a few costs that you’ll need to cover as a borrower:

 

Arrangement Fee


Also known as a lender facility fee, it is a fee paid to the lender upon completion of loan disbursement. The amount recouped as an arrangement fee is usually between 1.2 – 2 % of the borrowed amount. Therefore, a bridging loan of £750,000 will attract a one-off payment of £9,000 – £15,000.

Monthly Interest Costs


The word loan is largely synonymous with the word interest- there’s no escaping it. In addition to the arrangement fee, you will also get the loan at an interest rate of 0.5 – 1.5%. The level of risk involved usually determines the rate- the higher the risk, the higher the rates. In the case of the £750,000 facility, you’d have to pay anywhere between £3,750 – £11,250 every month as interest. The lender can choose to recoup the interest in one of three ways:
 

  • Monthly interest- The amount supposed to be paid as monthly interest is paid each month.
  • Deferred interest- The loan accrues a certain amount of interest monthly, which the borrower can pay monthly or choose to defer without penalty as long as the total sum owed in terms of interest is cleared by the end of the loan term.
  • Retained interest- Once the borrower and the lender settle on a rate and a loan term, the total sum owed in terms of interest is calculated and should be repaid at the end of the said loan term. However, should the borrower opt to clear the loan earlier, the sum owed in interest is amended to reflect the new loan term.

Legal Fees

This is the fee you pay for the services of your lender’s legal practitioner in arranging for the facility.

Valuation Fees


This is the cost incurred from the legal valuation of the property to be used as collateral, and it varies based on the surveyor, the type of valuation, the location, the value of the asset etc. In most cases, a valuation costs somewhere in the region of £250 – £2,000.

Exit Fees

Some lenders also charge an exit fee on completion of the loan repayment. It’s usually 1-2% of the loan or one month’s interest.

How are Bridging Loans Settled?

A bridging loan is regarded as settled once the borrower repays the loan amount in full, including the summation of any interest or fees accrued throughout the loan term. Prior to having the funds released, a strong exit strategy is required to ensure the capital needed to service the bridging loan is available. This could be through the sale of the property stated as collateral or refinancing on the property.

How Competitive Are Bridging Loan Interest Rates?

The table below compares the different types of loans, typical LTVs and rates available for such facilities. It is important to note that these rates are subject to approval from the underwriter and credit committee; therefore, the terms are always subject to change.
Type LTV Interest Rate Minimum Loan  Arrangement Fee Maximum Loan Term Exit Fee Credit Requirements
Prime unregulated residential bridging loans England

Max

75%

0.75% £75,000 1.2% £5,000,000 3-24 Months N/A

Clean 

Credit card 

Prime unregulated residential bridging loans in the South of England

Max

65%

0.49% £75,000 1.45% £4,000,000 3-24 Months N/A

Clean 

Credit card 

Unregulated residential refurbishment bridging loans England

Max

68% net
+ 100% refurb cost

06.8% £150,000 2% £25,000,000 3-24 Months N/A

Clean 

Credit card 

Unregulated residential non status valuation only bridging loans in England

Max

68%

1.45% £50,000 2% £1,500,000 3-24 Months N/A None 
Prime unregulated residential bridging loans in London and South East of England

Max

72%

0.5% £1,000,000 2% £30,000,000 3-24 Months N/A

Clean 

Credit card 

Second charge unregulated bridging loan in England

Max

65%

0.85% £200,000 2% £25,000,000 3-24 Months N/A None
Commercial bridging loans in South East England

Max

70%

0.85% £200,000 2% £25,000,000 3-24 Months N/A

Clean 

Credit card 

Land bridging loans in the South of England

Max

65%

0.8% £1,000,000 2% £30,000,000 3-24 Months N/A

Clean 

Credit card 

Development exit bridging loan south of England

Max

75%

0.75% £200,000 1-2% £5,000,000 3-24 Months N/A

Clean 

Credit card 

Semi commercial bridging loans

Max

70%

0.80% £100,000 2% £10,000,000 3-24 Months N/A None

Is a Bridging Loan Regulated?

Bridging loans are either regulated or unregulated. Loans are regulated when the borrower forwards a property they own, occupy or intend to occupy in the future as collateral. In the United Kingdom, loans are authorised and regulated by the Financial Conduct Authority (FCA). On the other hand, unregulated bridging loan borrowers do not receive protection from the FCA. These loans are primarily issued against commercial property or property intended for business purposes.

What Role Does the Financial Conduct Authority Play?

The Financial Conduct Authority is an independent regulatory body which provides rules and guidance for the financial service industry in order to protect consumers, maintain the stability of financial markets, and promote healthy competition among financial service providers.

Regulated bridging loans are authorised and regulated by the Financial Conduct Authority (FCA), which falls under the same stringent regulations that govern residential mortgages. They help in vetting a finance broker or a lender before they can be allowed to provide any financial services.

Are There Risks Involved With Taking a Bridging Loan?

 
As with any loan facility, there are certain risks involved with taking a bridging loan. Some of them include:
 

  • High penalty interest charges involved with non-payment and late repayments
  • In case of default, your collateral assets may be repossessed by the lender.
  • Having an exit strategy is not a guarantee that one will have the available funds for repayment at the end of the loan term.
  • Failure to take note of the fine print can lead to borrowers breaching the loan terms (get a competent bridging loan broker).

Are There Alternatives to Bridging Finance?

 
Alternative products to bridging finance include:
 

  • Unsecured lending
  • Remortgaging
  • Commercial loans
  • Asset loans
  • Invoice finance
  • Asset refinancing
  • Commercial and residential property mortgage
  • A second charge mortgage

Can I Get a Bridging Loan Today?

At Tiger Financial, our doors and phone lines are always open to prospective clients. All you need to do is give us a call or send us your personal information and the requirements of your project. First, we’ll leverage our experience and market contacts to furnish you with a selection of quotes so that you can settle on the one that is most suitable for your project. The team will then work with you through the evaluation, paperwork, and legal requirements. This process may last anywhere between 3 days to 4 short weeks. Alternatively, you can have us give you a call after filling and submitting our online contact form.