Bridging Loans

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A bridging loan is a short-term interest-only loan available to those that need access to capital quickly. Traditionally used for a property purchase, it is a loan to ‘bridge’ the gap while other finance (such as a mortgage or sale of property) is secured by the borrower. Bridging can also be used for a remortgage of a customers existing security or can be secured by way of a second charge. Bridging finance is secured, meaning the borrower uses property (or land) as security to the lending institution.

","broker_specific":0,"hs_child_table_id":0,"hs_created_at":1658324491663,"hs_deleted_at":0,"hs_id":79661456446,"hs_is_edited":false,"hs_published_at":1708095516058,"hs_updated_at":1664538347628,"products":[{"createdAt":null,"createdByUserId":0,"id":1,"isHubspotDefined":false,"label":"bridging-loans","labelTranslations":{},"name":"bridging-loans","order":0,"type":"option","updatedAt":null,"updatedByUserId":0}],"question":"What is a Bridging Loan?","sub_category":{"createdAt":null,"createdByUserId":0,"id":1,"isHubspotDefined":false,"label":"The Basics","labelTranslations":{},"name":"The Basics","order":0,"type":"option","updatedAt":null,"updatedByUserId":0}},{"answer":"Anyone can apply for a bridging loan, either as an individual or a limited company.","broker_specific":0,"hs_child_table_id":0,"hs_created_at":1658401069161,"hs_deleted_at":0,"hs_id":79799294057,"hs_is_edited":false,"hs_published_at":1708095516058,"hs_updated_at":1662126252534,"products":[{"createdAt":null,"createdByUserId":0,"id":1,"isHubspotDefined":false,"label":"bridging-loans","labelTranslations":{},"name":"bridging-loans","order":0,"type":"option","updatedAt":null,"updatedByUserId":0}],"question":"Who can apply for a Bridging Loan?","sub_category":{"createdAt":null,"createdByUserId":0,"id":1,"isHubspotDefined":false,"label":"The Basics","labelTranslations":{},"name":"The Basics","order":0,"type":"option","updatedAt":null,"updatedByUserId":0}},{"answer":"

Bridging loans are mainly used by clients who need quick, short-term capital to fund a property purchase. They include those who:

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• Broken Property Chains - A bridging loan can be used to fix a broken property chain.
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• Un-mortgageable - If a property is unmortgageable, such as a house without a kitchen or bathroom, borrowers can use a bridging loan to purchase it. 
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• Renovations / Conversions - A bridging loan is an option if a borrower's goal is to renovate a property with the aim of adding value to sell at a higher price.
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• Lease Extensions - Purchasing a property that has less than 80 years left on the lease can be challenging, as the banks may decline the mortgage.
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• Planning Permissions - If your client wanted to purchase land or property for the sole purpose of getting planning permission (or use change) and then re-selling, a bridging loan could finance that transaction. Land with planning permission granted commands a higher value, so they could sell on for a profit or alternatively develop it themselves, exiting on to a development finance facility.
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• Auction Purchases - When purchasing a property at an auction your client will usually have to pay a deposit 10% of the full price on the day of the auction - and will have up to 28 days to pay the remaining funds. A bridging loan can be very helpful when they need access to money fast, so many people use bridging loans for this purpose and then repay the loan once they have the mortagge.
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","broker_specific":0,"hs_child_table_id":0,"hs_created_at":1658401615635,"hs_deleted_at":0,"hs_id":79804998962,"hs_is_edited":false,"hs_published_at":1708095516058,"hs_updated_at":1664545260062,"products":[{"createdAt":null,"createdByUserId":0,"id":1,"isHubspotDefined":false,"label":"bridging-loans","labelTranslations":{},"name":"bridging-loans","order":0,"type":"option","updatedAt":null,"updatedByUserId":0}],"question":"Who might need a Bridging Loans?","sub_category":{"createdAt":null,"createdByUserId":0,"id":1,"isHubspotDefined":false,"label":"The Basics","labelTranslations":{},"name":"The Basics","order":0,"type":"option","updatedAt":null,"updatedByUserId":0}},{"answer":"

There are many benefits to bridging loans such as speedy application, quick transfer and broader lending criteria - to name a few. Let's look at these and others in more detail. 

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• Speedy Application Process
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• Adaptive Lending Criteria
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• Repayment Options 
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• Condition of security properties not a factor
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","broker_specific":0,"hs_child_table_id":0,"hs_created_at":1661418623252,"hs_deleted_at":0,"hs_id":82987640162,"hs_is_edited":false,"hs_published_at":1708095516058,"hs_updated_at":1664546369564,"products":[{"createdAt":null,"createdByUserId":0,"id":1,"isHubspotDefined":false,"label":"bridging-loans","labelTranslations":{},"name":"bridging-loans","order":0,"type":"option","updatedAt":null,"updatedByUserId":0}],"question":"What are the benefits of bridging loans?","sub_category":{"createdAt":null,"createdByUserId":0,"id":1,"isHubspotDefined":false,"label":"The Basics","labelTranslations":{},"name":"The Basics","order":0,"type":"option","updatedAt":null,"updatedByUserId":0}},{"answer":"

We tend to see three main exit routes for bridging finance.

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1. Sale of property – The client may sell the property that the bridging finance has been secured against within the term of the loan to repay the bridging loan. This can also be the sale of an alternative property.

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2. Refinance – This could be the refinancing of the bridging loan with a mortgage or in some case another bridging loan from a different lender (a lender cannot write back-to-back bridging loans on the same property). This would usually need to be evidenced by an agreement in principle.

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3. Cash redemption – The client will need to evidence that a definite cash sum will be made available during the term of the loan, substantial enough to redeem the loan. 

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There are other exit routes that can be considered alongside these, as long as we are able to obtain evidence they will occur within the term and are deemed viable by the lender, consideration can be made.

","broker_specific":0,"hs_child_table_id":0,"hs_created_at":1661419078972,"hs_deleted_at":0,"hs_id":82981268008,"hs_is_edited":false,"hs_published_at":1708095516058,"hs_updated_at":1664547476444,"products":[{"createdAt":null,"createdByUserId":0,"id":1,"isHubspotDefined":false,"label":"bridging-loans","labelTranslations":{},"name":"bridging-loans","order":0,"type":"option","updatedAt":null,"updatedByUserId":0}],"question":"What are viable exit routes for Bridging Finance?","sub_category":{"createdAt":null,"createdByUserId":0,"id":1,"isHubspotDefined":false,"label":"The Basics","labelTranslations":{},"name":"The Basics","order":0,"type":"option","updatedAt":null,"updatedByUserId":0}},{"answer":"

Ideally, this shouldn’t happen as the exit route will be a major part of the underwriting of the case at outset.

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The ability to repay the loan is a fundamental element to the loan being granted in the first instance, but circumstances can change during the loan – if they do and the exit cannot be achieved within the timescales, there are two options. The customer should give as much notice to the existing lender if they foresee any issues in redeeming their loan in time, and we can help to arrange another way of repaying the loan

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1 – Going back to the existing lender to extend the term. This will incur a new set of fees in line with arranging the original loan.

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2 – Rebridging to another lender – however, this will typically be more expensive because the client wasn’t able to exit the bridge within the original loan term and is therefore riskier. It's important to pay off the bridging loan before it expires to avoid paying expensive fees and penalties.

","broker_specific":0,"hs_child_table_id":0,"hs_created_at":1661419131523,"hs_deleted_at":0,"hs_id":82987640170,"hs_is_edited":false,"hs_published_at":1708095516058,"hs_updated_at":1664548042450,"products":[{"createdAt":null,"createdByUserId":0,"id":1,"isHubspotDefined":false,"label":"bridging-loans","labelTranslations":{},"name":"bridging-loans","order":0,"type":"option","updatedAt":null,"updatedByUserId":0}],"question":"What happens if the client doesn't exit the bridge within the agreed term?","sub_category":{"createdAt":null,"createdByUserId":0,"id":1,"isHubspotDefined":false,"label":"The Basics","labelTranslations":{},"name":"The Basics","order":0,"type":"option","updatedAt":null,"updatedByUserId":0}},{"answer":"Retaining interest on the loan is a common feature of bridging finance. It gives the clients the option of borrowing the interest payments as part of the loan agreement. This means they then do not need to make monthly payments to the loan provider (which can be substantial), nor prove their affordability at the underwriting stage.","broker_specific":0,"hs_child_table_id":0,"hs_created_at":1661419174572,"hs_deleted_at":0,"hs_id":82981268013,"hs_is_edited":false,"hs_published_at":1708095516058,"hs_updated_at":1662126298251,"products":[{"createdAt":null,"createdByUserId":0,"id":1,"isHubspotDefined":false,"label":"bridging-loans","labelTranslations":{},"name":"bridging-loans","order":0,"type":"option","updatedAt":null,"updatedByUserId":0}],"question":"What does retained interest mean?","sub_category":{"createdAt":null,"createdByUserId":0,"id":1,"isHubspotDefined":false,"label":"The Basics","labelTranslations":{},"name":"The Basics","order":0,"type":"option","updatedAt":null,"updatedByUserId":0}},{"answer":"If your clients choose to have the interest retained or rolled up, it is important to note what impact this will have on the net loan amount available to the borrower. 

If the client is looking to achieve the maximum loan to value available, interest and fees can generally only be added up to 75% maximum.

If the exceeds this threshold once interest and fees are added, they will be deducted from the loan instead.

For example, your client wants to borrow £100,000 at 75% LTV and interest rates will be 1% per month.

With a 12-month term and after 2% fees, the net loan amount will be £86,000 As the monthly interest payments of £12,000 and the fees will have to be deducted from the gross loan to ensure the entire borrowing does not exceed 75% loan to value.

It is important to note that the client will only ever pay for what they use. If they elect to retain interest on the loan, but are able to repay the loan before the end of the term they will receive a refund of unused interest.

Again, using the scenario above, if the client where able to repay the bridging loan in month six, and did not require the full 12-months, they would receive a refund of six months' unused interest payment; £6,000 in this example.","broker_specific":0,"hs_child_table_id":0,"hs_created_at":1661419246339,"hs_deleted_at":0,"hs_id":82981268015,"hs_is_edited":false,"hs_published_at":1708095516058,"hs_updated_at":1664548319207,"hs_updated_by_user_id":25791956,"products":[{"createdAt":null,"createdByUserId":0,"id":1,"isHubspotDefined":false,"label":"bridging-loans","labelTranslations":{},"name":"bridging-loans","order":0,"type":"option","updatedAt":null,"updatedByUserId":0}],"question":"What’s the impact of retained interest on a Bridging Loan?","sub_category":{"createdAt":null,"createdByUserId":0,"id":1,"isHubspotDefined":false,"label":"The Basics","labelTranslations":{},"name":"The Basics","order":0,"type":"option","updatedAt":null,"updatedByUserId":0}},{"answer":"A regulated bridge is if you’re securing funds against what is or will become your main residence, or your family intend to occupy the property. Or if the loan is secured on a property that has been inherited or has previously been occupied by yourself or family members. Unregulated is if you're securing funds against any property which is not your residence and will not become in the future. In terms of length, regulated bridging loans are up to a maximum of 12 months term whereas unregulated bridging loans can go to 24 months in some cases. Also, it's worth noting that some bridging lenders themselves are unregulated and can't offer FCA-regulated bridging loans. ","broker_specific":0,"hs_child_table_id":0,"hs_created_at":1661419307657,"hs_deleted_at":0,"hs_id":82987640359,"hs_is_edited":false,"hs_published_at":1708095516058,"hs_updated_at":1703070330310,"hs_updated_by_user_id":25791956,"products":[{"createdAt":null,"createdByUserId":0,"id":1,"isHubspotDefined":false,"label":"bridging-loans","labelTranslations":{},"name":"bridging-loans","order":0,"type":"option","updatedAt":null,"updatedByUserId":0}],"question":"What’s the difference between Regulated vs Unregulated Bridging Loans?","sub_category":{"createdAt":null,"createdByUserId":0,"id":1,"isHubspotDefined":false,"label":"The Basics","labelTranslations":{},"name":"The Basics","order":0,"type":"option","updatedAt":null,"updatedByUserId":0}},{"answer":"For regulated bridging loans your most competitive rate starts at 0.45% per month, for unregulated bridging rates start at 0.47% per month (as of Sept 2022).","broker_specific":0,"hs_child_table_id":0,"hs_created_at":1661419342795,"hs_deleted_at":0,"hs_id":82987640360,"hs_is_edited":false,"hs_published_at":1708095516058,"hs_updated_at":1664548342881,"products":[{"createdAt":null,"createdByUserId":0,"id":1,"isHubspotDefined":false,"label":"bridging-loans","labelTranslations":{},"name":"bridging-loans","order":0,"type":"option","updatedAt":null,"updatedByUserId":0}],"question":"What interest rates can I expect with Bridging Loans?","sub_category":{"createdAt":null,"createdByUserId":0,"id":1,"isHubspotDefined":false,"label":"The Basics","labelTranslations":{},"name":"The Basics","order":0,"type":"option","updatedAt":null,"updatedByUserId":0}},{"answer":"The great flexibility of bridging often ties into the associated expense of bridging loans. Most lenders will allow borrowers the flexibility to pay the loan back at any time without penalties, as well as retaining interest into the loan so that cash outflows can be managed, and to secure on most types of properties including houses, flats, commercial units, land with planning, uninhabitable, and un-mortgageable properties.","broker_specific":0,"hs_child_table_id":0,"hs_created_at":1661419370079,"hs_deleted_at":0,"hs_id":82981268016,"hs_is_edited":false,"hs_published_at":1708095516058,"hs_updated_at":1662126306466,"products":[{"createdAt":null,"createdByUserId":0,"id":1,"isHubspotDefined":false,"label":"bridging-loans","labelTranslations":{},"name":"bridging-loans","order":0,"type":"option","updatedAt":null,"updatedByUserId":0}],"question":"How flexible are Bridging Loans?","sub_category":{"createdAt":null,"createdByUserId":0,"id":1,"isHubspotDefined":false,"label":"The Basics","labelTranslations":{},"name":"The Basics","order":0,"type":"option","updatedAt":null,"updatedByUserId":0}},{"answer":"

Unlike a standard, high street residential mortgage, bridging loans are underwritten with less focus on formal criteria, affordability and credit checks and more focus on the strength, viability and plausibility of the client’s exit strategy to pay off the loan and the quality of the asset offered as security - rather than the client’s ability to pay. 

Of course, there will still be formal identification checks in order to prove identification of borrowers to lenders.

","broker_specific":0,"hs_child_table_id":0,"hs_created_at":1661419384383,"hs_deleted_at":0,"hs_id":82987640361,"hs_is_edited":false,"hs_published_at":1708095516058,"hs_updated_at":1664548423246,"products":[{"createdAt":null,"createdByUserId":0,"id":1,"isHubspotDefined":false,"label":"bridging-loans","labelTranslations":{},"name":"bridging-loans","order":0,"type":"option","updatedAt":null,"updatedByUserId":0}],"question":"How are Bridging Loans underwritten?","sub_category":{"createdAt":null,"createdByUserId":0,"id":1,"isHubspotDefined":false,"label":"The Basics","labelTranslations":{},"name":"The Basics","order":0,"type":"option","updatedAt":null,"updatedByUserId":0}},{"answer":"","broker_specific":0,"hs_child_table_id":0,"hs_created_at":1661419415578,"hs_deleted_at":0,"hs_id":82981268017,"hs_is_edited":false,"hs_published_at":1708095516058,"hs_updated_at":1662641636038,"products":[{"createdAt":null,"createdByUserId":0,"id":1,"isHubspotDefined":false,"label":"bridging-loans","labelTranslations":{},"name":"bridging-loans","order":0,"type":"option","updatedAt":null,"updatedByUserId":0}],"question":"Why choose a Specialist Finance distributor instead of going direct to the lender?","sub_category":{"createdAt":null,"createdByUserId":0,"id":1,"isHubspotDefined":false,"label":"The Basics","labelTranslations":{},"name":"The Basics","order":0,"type":"option","updatedAt":null,"updatedByUserId":0}},{"answer":"Your client can borrow against residential, semi-commercial (such as a shop with residential units above it) and commercial properties - in any state, including half built or fire damaged. We can also arrange lending against land, with or without planning permission.","broker_specific":0,"hs_child_table_id":0,"hs_created_at":1662126475431,"hs_deleted_at":0,"hs_id":83780318300,"hs_is_edited":false,"hs_published_at":1708095516058,"hs_updated_at":1662126523443,"products":[{"createdAt":null,"createdByUserId":0,"id":1,"isHubspotDefined":false,"label":"bridging-loans","labelTranslations":{},"name":"bridging-loans","order":0,"type":"option","updatedAt":null,"updatedByUserId":0}],"question":"Which types of property can a bridging loan be used for?","sub_category":{"createdAt":null,"createdByUserId":0,"id":2,"isHubspotDefined":false,"label":"Criteria","labelTranslations":{},"name":"Criteria","order":1,"type":"option","updatedAt":null,"updatedByUserId":0}},{"answer":"As bridging loans are for the short-term, each client must have a plan in place to pay off the loan. This is known as an ‘exit route’ or 'exit strategy'. A viable exit route is a must on all bridging loan applications. Typical strategies include sale of property or refinancing onto a longer term mortgage.","broker_specific":0,"hs_child_table_id":0,"hs_created_at":1662126529753,"hs_deleted_at":0,"hs_id":83780318304,"hs_is_edited":false,"hs_published_at":1708095516058,"hs_updated_at":1662126559203,"products":[{"createdAt":null,"createdByUserId":0,"id":1,"isHubspotDefined":false,"label":"bridging-loans","labelTranslations":{},"name":"bridging-loans","order":0,"type":"option","updatedAt":null,"updatedByUserId":0}],"question":"What is an exit route?","sub_category":{"createdAt":null,"createdByUserId":0,"id":2,"isHubspotDefined":false,"label":"Criteria","labelTranslations":{},"name":"Criteria","order":1,"type":"option","updatedAt":null,"updatedByUserId":0}},{"answer":"A bridging loan can be taken out from one day up to 24 months.","broker_specific":0,"hs_child_table_id":0,"hs_created_at":1662126560867,"hs_deleted_at":0,"hs_id":83783571328,"hs_is_edited":false,"hs_published_at":1708095516058,"hs_updated_at":1664538389261,"products":[{"createdAt":null,"createdByUserId":0,"id":1,"isHubspotDefined":false,"label":"bridging-loans","labelTranslations":{},"name":"bridging-loans","order":0,"type":"option","updatedAt":null,"updatedByUserId":0}],"question":"How long can a bridging loan be taken out for?","sub_category":{"createdAt":null,"createdByUserId":0,"id":3,"isHubspotDefined":false,"label":"Terms","labelTranslations":{},"name":"Terms","order":2,"type":"option","updatedAt":null,"updatedByUserId":0}},{"answer":"The minimum amount for a bridging loan is £26,000 and the maximum can be over £20m. The maximum is subject to LTV typically 75-80%. We work with lenders who will go to 100% LTV with additional security. At Aria Finance, we have vast experience in securing multi-million-pound loans.","broker_specific":0,"hs_child_table_id":0,"hs_created_at":1662126589047,"hs_deleted_at":0,"hs_id":83780318305,"hs_is_edited":false,"hs_published_at":1708095516058,"hs_updated_at":1664538482952,"products":[{"createdAt":null,"createdByUserId":0,"id":1,"isHubspotDefined":false,"label":"bridging-loans","labelTranslations":{},"name":"bridging-loans","order":0,"type":"option","updatedAt":null,"updatedByUserId":0}],"question":"How much can my client borrow?","sub_category":{"createdAt":null,"createdByUserId":0,"id":3,"isHubspotDefined":false,"label":"Terms","labelTranslations":{},"name":"Terms","order":2,"type":"option","updatedAt":null,"updatedByUserId":0}},{"answer":"Our experience means that in most cases we will be able to confirm almost straight away whether your client’s application is likely to be successful.","broker_specific":0,"hs_child_table_id":0,"hs_created_at":1662126674389,"hs_deleted_at":0,"hs_id":83783984926,"hs_is_edited":false,"hs_published_at":1708095516058,"hs_updated_at":1662126692354,"products":[{"createdAt":null,"createdByUserId":0,"id":1,"isHubspotDefined":false,"label":"bridging-loans","labelTranslations":{},"name":"bridging-loans","order":0,"type":"option","updatedAt":null,"updatedByUserId":0}],"question":"When will my client find out if their application has been successful?","sub_category":{"createdAt":null,"createdByUserId":0,"id":4,"isHubspotDefined":false,"label":"Applications Process","labelTranslations":{},"name":"Applications Process","order":3,"type":"option","updatedAt":null,"updatedByUserId":0}},{"answer":"From the initial enquiry through to completion, our average turnaround time is between two and three weeks.","broker_specific":0,"hs_child_table_id":0,"hs_created_at":1662126694344,"hs_deleted_at":0,"hs_id":83783984927,"hs_is_edited":false,"hs_published_at":1708095516058,"hs_updated_at":1662126716252,"products":[{"createdAt":null,"createdByUserId":0,"id":1,"isHubspotDefined":false,"label":"bridging-loans","labelTranslations":{},"name":"bridging-loans","order":0,"type":"option","updatedAt":null,"updatedByUserId":0}],"question":"How long will an application take to complete?","sub_category":{"createdAt":null,"createdByUserId":0,"id":4,"isHubspotDefined":false,"label":"Applications Process","labelTranslations":{},"name":"Applications Process","order":3,"type":"option","updatedAt":null,"updatedByUserId":0}},{"answer":"

Fees will vary on a case-by-case basis depending on the customers' circumstances and loan requirements. Aria Finance will provide a quotation for your enquiry which will detail the fees that will be payable.

","broker_specific":0,"hs_child_table_id":0,"hs_created_at":1662126717726,"hs_deleted_at":0,"hs_id":83783984930,"hs_is_edited":false,"hs_published_at":1708095516058,"hs_updated_at":1664538669064,"products":[{"createdAt":null,"createdByUserId":0,"id":1,"isHubspotDefined":false,"label":"bridging-loans","labelTranslations":{},"name":"bridging-loans","order":0,"type":"option","updatedAt":null,"updatedByUserId":0}],"question":"Can my client repay their bridging loan early?","sub_category":{"createdAt":null,"createdByUserId":0,"id":3,"isHubspotDefined":false,"label":"Terms","labelTranslations":{},"name":"Terms","order":2,"type":"option","updatedAt":null,"updatedByUserId":0}}],"offset":0,"total":20,"totalCount":20}