Bridging loans are short-term secured loans traditionally associated with buying a new property before selling an old one. Commercially, they are often used to bridge the gap between the purchase of a property and organizing longer-term finance like a mortgage. Bridging loans tend to be an expensive choice of loan, which is why they are short-term, usually lasting just 12 months.
They are intended for situations where you may need cash to turn around a project quickly or because you are bridging between properties. Because they are an expensive choice of loan, the most important criteria the lenders are looking for to turn around a project
Bridging loans are short-term, usually lasting just 12 months. So you may choose one if you only need money temporarily – perhaps to sort out a cashflow problem or because you intend to turn around a project quickly. Because they are an expensive choice of loan, the most important criteria for the lender are proof of how you intend to exit the loan and your financial plan following the bridging loan.
Let’s take a look at some of the best bridging loan providers, in Funding Bay’s opinion.
Together
A bridging loan provided by Together lasts for an agreed term, which is typically 12 months, and you must pay back the loan within this time. A bridging loan lasts for an agreed-upon term—typically 12 months. They then provide the loan you need, and you pay it back before or when the term ends. They charge interest each month, and depending on what type of bridge loan you have, you can choose to repay on an interest-only basis or roll up payments and add these to the lump sum. If you then repay the lump sum before the term ends, you may be charged less interest.
The interest rate on a Together bridging loan is influenced by several factors, including the type and value of your property, how much you need to borrow, and your credit history.
LendWell
The team at LendWell has experts in property lending to developers, and property investors, and also direct experience in developing and investing in property. LendWell is a specialist lender who provides funding for refurbishments, conversions, and light development, as well as traditional bridging finance. Their bridging finance package is ideal for auctions, light refurbishments, and pre-development finance. Residential, commercial, and land property are all accepted on LendWell’s terms.
Their loan offers to let you borrow up to 75% LTV, up to £25 million. Pricing starts at 0.63% per month.
SoMo
At SoMo they do not have set criteria and will lend 1st, 2nd, or 3rd charges on residential land, commercial land, buy-to-let properties, and HMOs. They also lend for exit strategies, and, for instance, they will lend to help you bridge out of a bridge. SoMo can provide bridging finance for any status or purpose and can arrange it quickly. SoMo allows investors to select which borrower to fund and which security to purchase. All the underlying loans are secured over UK property by a mortgage or legal charge.
Property and bridging loans of up to 75% LTV. Loan sizes range from £25 thousand to £5 million, with rates of 0.49% per month. The flexibility is in your hands, you choose the loan term and when to pay the interest.
United Trust Bank
The team at United Trust Bank focuses on every client individually. Every bridging loan is different, and as a result, each case presents its own challenges and solutions. Their bridging loans can be used to bridge the gap between purchase and sale, to raise working capital, for portfolio restructuring, asset purchase, or refinance.
They offer loans for residential property or mixed-use security property. They have 1st and 2nd combination charges, with no upper age limit, interest calculated daily, rolled interest facility, and valuations and legal fees at cost.
They offer loans from £75k up to £15m+. They let you borrow a max of 65% LTV, with a minimum property value of £150k for single securities and £100k for single securities.
Book an online consultation with the team at Funding Bay to find out more!
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