Bridging Loans

Short Term Finance To Cover The Gap

Bridging loans UK

A bridge loan is effectively a borrowed amount that 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-term 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, reducing 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. We are here for you with an extensive network of lenders and specialist knowledge in all financing areas. 

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 who can not prove income.
• Those with 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 typically 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.