LEADING UK BROKER FOR
Large Bridging Loans
We provide large bridging loans for residential and commercial property transactions
Seeking professional advice is highly recommended if you’re planning to take out a hefty amount of bridging finance, and in this article, you’ll learn everything you need to know about large bridging loans.
What is a large bridging loan?
Bridging loans are a fast and flexible form of short-term funding. Common reasons to apply for a bridging loan are to quickly purchase a property for instance from an auction or for property developers who need additional funding to allow further time for sales. They can, in fact, be used for essentially any business purpose within reason.
A large bridging loan is when the loan amount that is being borrowed from a lender reaches the millions or even billions. Technically there is no upper limit to a large bridging loan; it’s left up to the lender’s discretion.
While some bridging finance lenders will class anything over £2.5 million as a large loan, other providers arrange much larger deals than this every day. Bridging loans worth tens of millions are not uncommon, and it may even be possible to borrow up to £250 million under the right circumstances.
The key thing to remember about bridging finance is that they’re short-term loans and the amount you can borrow is largely governed by the strength of the exit strategy or, to put it another way, how you plan to pay off the bridging loan.
If your exit strategy will recoup the amount you need to borrow and cover the interest charges, then there is pretty much no limit for the amount you could potentially borrow. Since most bridging lenders are not regulated, they have the flexibility to assess all applications on a case-by-case basis.
How does a large bridging loan work?
To access a bridging loan, you must offer up a property to be used as collateral, should you fail to repay the loan. The amount of money you can borrow is based on the Loan to Value of the property, usually capped at 80%.
How do I know if I’m eligible for a large bridging loan?
The lending criteria for bridging loans are far more flexible than those of a standard mortgage loan. This means you will be able to apply for a large bridging loan even if you have a poor credit score. Applicants must be over 18 years of age, but there’s no strict age bracket.
Lenders are more interested in smart business moves, meaning that as long as you have a property that can be used as collateral and a sound exit strategy to give lender’s confidence that you can make your repayments, you’ll be considered for a large bridging loan.
The different types of bridging loans
- Open bridging loans
- Closed bridging loans
- First charge and Second charge bridging loans
- Regulated bridging loans
- Unregulated bridging loans
What are large bridging loans used for?
Large bridging loans are most commonly used for investing in high-value property where timing is of the essence. Here are some examples.
Buying a high-value property at auction
Winning bidders usually need to exchange contracts and pay a deposit on the day and then pay the remaining amount within 28 days. In a scenario like this, a mortgage might take too long to arrange, but a specific type of bridging product called auction finance could give you the capital needed ahead of the deadline.
Renovating an uninhabitable property
Let’s say you want to buy a dilapidated property and a plot of land that’s worth over £2.5 million, despite the extensive work that is needed. If a mortgage lender believes that the property is uninhabitable, you may not be able to get a traditional mortgage on it. A bridging loan, however, could provide you with the funds needed to make the property mortgageable again. You could then take out a land mortgage to pay off the bridging loan.
Heavy refurbishment work
You might already own a property and want to invest £2.5 million or more into refurbishments. Using a bridging loan would allow you to start the works quickly and borrow against the property’s increased value via a remortgage to pay off the debt after the renovations have been completed. For projects involving extensive development work, your broker might suggest considering development finance as an alternative to bridging finance.
Buying land without planning permission
Perhaps you want to get a mortgage on a plot of land that is worth a hefty amount but has no planning permission in place. Some mortgage providers might decline to lend under these circumstances, and there might be a cash buyer ready to pip you to the purchase. But by using a bridging loan, you could secure the plot before applying for planning permission. Once it’s been granted, you could apply for a mortgage to cover the exit strategy.
These are just a few common scenarios where somebody might use a large bridging loan, but they have many other uses. Basically, if you’re looking to make a large property investment but don’t have the time to arrange a mortgage, don’t want to take one out, or won’t qualify for one in the short term, a bridging loan could be another option.
How to get a large bridging loan
If you’re making a large investment and need a sizable amount of bridging finance, there could be a lot at stake, so be sure to seek professional advice before proceeding. Bridging loans tend to come with high-interest rates and are often only recommended as a last resort.
Bridging loan providers can be large organisations or small ‘private’ investors willing to look at bridging loans on a case-by-case basis.
With this in mind, it’s a good idea to start off by speaking with a specialist bridging finance broker who can help you determine whether it’s the right option, suggest potential alternatives, and make sure you end up with the best possible deal if you choose to proceed.
If the amount you need to borrow is especially high, you’ll need to find a bridging lender who specialises in high-value transactions, and a broker who arranges these deals every day can introduce you to the right finance provider potentially saving you time and money.
To qualify for a large bridging loan, you will need a very good exit strategy.
What is an exit strategy?
Having a viable exit strategy is usually a deal-breaker for bridging finance lenders, and this is certainly true when it comes to large value transactions. The exit strategy is basically how you plan on paying off the debt at the end of the term. Where property is concerned, this would usually be through a remortgage or the proceeds from a sale.
How we can help you
We offer specialist bridging finance services:
- Bridging finance from £500,000 up to £50 million
- Exclusive rates from 0.175% pm
- Terms from 12 months to 24 months
- LTVs up to 80% (can be more if other assets are in the background)
- Interest roll-up options
- Residential finance (On a regulated basis), for residential property purchase e.g. downsizing, second residential property
- Buy to let, HMO, investment and commercial properties considered
- Light refurbishment finance (currently uninhabitable, under permitted development rules, require internal refurbishment)
- Heavy refurbishment finance (extensions, basement digs, loft conversions, commercial to residential, barn conversions)
- Development bridging finance for new build residential and commercial properties and property conversion e.g. under permitted development rights
- Business finance (Paying an HMRC tax bill, purchasing land or new premises, deposit for a new purchase, business growth)
- Alternative assets considered e.g. pension, investment portfolios, fine art, classic cars
- We provide professional service to help you get the money you need at the best available rates in line with your timescales
Would you like to discuss our services?
As one of the UK’s premier bridge loan providers, we work with clients to ensure they have the funds and security to purchase another property. Whether it’s for business or residential purposes, our friendly team can discuss the flexible nature of our service and will therefore help you choose the correct terms.
We’re happy to discuss your current financial situation, including assets, equity and tell you more about the LTV calculator we use to determine your deposit and costs.
Our registered office in England is available to take your calls and arrange a free consultation. We are registered specialist lenders. Any residential bridging loan solution you use through us will be fully authorised and regulated by the FCA.