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!

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.

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.

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.

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).

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.