Bridging Loans | Short-Term Bridge Loans Scotland

Short Term Finance To Cover The Gap

Bridging loans UK

What is a bridging loan?

Short term financing to ‘bridge’ a gap in arrangements
Typically taken out for 12 months for residential properties or 18+ month for development property
Short term structured borrowing costs
Borrowing is often repaid in less than a year

A bridge loan is effectively a borrowed amount which is used to cover a gap in long-term finance arrangements or to cover specific short-term requirements.

With similar amounts of finance as a mortgage, but with a shorter-term repayment structure, bridging loans are often used to ‘bridge‘ the gap in moving a business into new premises or cover a home loan while you wait to sell.

But you may be wondering, why should I take out short-term financing?

The advantages of a bridging loan

Terms can be tailored to suit your unique circumstances and projections.
A short-terk bridge loan can be arranged much quicker, within days or weeks, rather than months as with a regular mortgage.
This type of short-term loan is secured against property value, meaning they do not focus on your income or credit record.
For regulated bridging loans, the interest will be included in the total amount of the loan, which is to be repaid by the exit strategy at the end. This helps to relieve financial pressure on homeowners already paying for a personal mortgage.
The same option to include interest in the total amount is also available to non-regulated investor borrowers, which can reduce the pressure on cash flow throughout the project.
It's possible to secure high loan-to-value (LTV) financing with a bridge loan. Many lenders are willing to offer 75% LTV terms, with some lenders willing to provide up to 80% LTV with additional security. The ability to source such a significant percentage of the finance needed gives borrowers sufficient leverage in buying a property in Scotland.

How to get a bridging loan

The bridging loans and development finance market has been enjoying brisk trading in recent times, and the Lending Channel can provide access to a wide range of secondary lenders.

Based in Scotland, we are experts in the Scottish bridging loans market, finding the best bespoke funding solutions available for our clients across the country (including Glasgow, Edinburgh, Fife, Dundee and Aberdeen) and throughout the UK.

We provide guidance, support, and services to secure the best market leading rates that will meet all your requirements for short-term financing. With an extensive network of lenders and specialist knowledge in all financing areas, we are here for you.

Get in touch, whether it is to simply ask 'what is a bridge loan?' or discuss your specific requirements and how we can help find you the best rates on the market.

Who qualifies for a bridging loan?

Those who can and those can not prove income
Those will an excellent or an impaired credit rating
The employed, self-employed or non-employed
Companies or individuals
Those with equity tied into their property or an available cash deposit

What is a bridge loan in real estate?

For property deals, a bridge loan can provide quick access to funds in situations such as when you wish to buy a new home before the complete sale of your existing property or if you are looking to buy at auction and need funds immediately.

The two types of this short-term bridge loan are:

Closed bridging loans

A fixed repayment date
The most likely option for those who have exchanged contracts but are waiting for the property sale to complete.

Open bridging loans

No fixed repayment date (although you are normally expected to pay it off within one year).

What are first and second-charge bridging loans?

When a bridging loan is taken out, a 'charge' will be placed on your property. This charge acts as a legal agreement that prioritises the lenders who will be repaid first your loans not be repaid.

If your property has a mortgage, it will likely be the case that a 2nd charge loan is what is taken, which that if the loan's repayments are completed, your home will be sold off to repay the debts with the mortgage being paid off first.

If the property is owned outright, or the bridge loan was to repay a mortgage in full, a 1st charge loan would be taken out. This means that the bridge loan would be paid off first if you fell behind with repayments.

Specialist Finance Panel

Our panel of specialist finance lenders can arrange bridging loans for many reasons, typically:

Open bridging loans and closed bridges; when there is a gap that needs bridging for property acquisition
Auction purchases, particularly when buying properties under market value
Development finance and short-term property finance; funding to purchase land or property for development (this funding is then redeemed by either the sale or refinance of the developed asset)
Cash flow
Tax bills

It is essential to consider your exit strategy before committing to a bridging loan, as this is a form of secured loan, and your property is at risk if you don’t secure funding in time to repay the bridging loan at the agreed date.

Please note that specialist finance of this type is not always authorised and regulated by the Financial Conduct Authority; therefore, our funders can afford to adopt a more flexible approach to assessing deals. Whatever your situation, give us a call to see if we can help.

The quickest way to have your short-term finance enquiry assessed is to telephone one of our advisers on 01738 583008 or complete the online enquiry to start the ball rolling.

Introducers

If you have landed on this page and you are not a direct client looking for a lending solution, perhaps you are interested in introducing business to us? If so, please call now for more details or follow the Introducers Link.

Case Studies

4.92% Secured Loan

The Lending Channel team recently completed a large £100k Secured Loan for a property client who needed to raise the cash quickly to assist with a property transaction.