Bridging loans are a good way to raise a lot of cash quickly. If you need quick cash flow, then a bridging loan could be a great option. These loans are used to bridge the gap between money going out and money coming back in. This type of finance is short-term only, usually between 6 months to 24 months
Loan amount Perhaps the most important consideration is the loan amount. Some lenders only deal in smaller amounts, say up to £75k, while others up to £800k. Those who lend small will be better suited to smaller companies.
How much does it Cost Bridging loans can be compared by reviewing interest rates and factoring in fees. A lower interest rate does not necessarily mean a lower loan cost because arrangement and set up fees can add significantly to it. Low fees are ideal and no fees at all preferable. Generally up to 1.75% per month is normal.
Loan To Value Most lenders offer up to 75%. for an example; this means is if a lender is offering 75% LTV and you have £200,000, they will let you draw £150,000. If you need more than the LTV offered, you may need to provide further security (ie another property)
Second charges Will you need a second charge? A ‘first charge’ is secured against the primary mortgage or loan against the property. If you need to access more money further down the line, a second charge can be secured against it. It is common for the second charge to have a lower LTV than the first charge.
Short term only Bridging loans are not a viable long-term finance solution. They are more expensive than standard loans. If you need to extend by a few months or have the means to pay back sooner, having an understanding lender is crucial. However, it is down to you to make sure your lender has a facility for extending the loan
Need bridging finance? If you need a bridging loan, we’d be happy to help arrange this. Please call our team today on 0208 987 8004 or email us at email@example.com