Bridging Finance

It’s short-term funding – usually for periods of 1 day to one year (and possibly longer)

More about Bridging Finance

What is Bridging Finance?

It’s short-term funding – usually for periods of 1 day to one year (and possibly longer) and always secured against property. It’s quick and bad credit is not a problem if sale is the method used repay the Bridge.

Generally, there is a gross loan and a net loan. The net loan is after interest and the set-up costs, but in some cases the interest can be serviced on a monthly basis, to get a higher day 1 amount.

The bridge can be a first, second or third charge loan

Uses of Bridging

The main use is when you can’t get funding from your own bank, or any other high street lender

  • development funding
  • major refurbishment of property
  • auction purchase
  • paying a tax bill
  • purchasing property under value

What types of valuation do lender use?

There are 2 main types which the lenders instruct.

  • Open market valuation (OMV) – which the surveyor thinks the property could be sold for after up to 12 months of being openly marketed
  • 180-day valuation – which the surveyor thinks the property could be sold for with in a 6-month period

Most Lenders use 180-day valuation, which is generally lower than OMV.

If you are looking at a high LTV bridge – you need to consider a lender which uses the OMV

Typical Costs and Charges

Most lenders charge an arrangement fee of 2% – this can be either added to the loan or deducted from the gross loan.

Below is a rate table which gives a good overview of the market. In some cases, we can negotiate better terms.

LTV Up to
40%		 Up to
45%		 Up to
50%		 Up to
55%		 Up to
60%		 Up to
65%		 Up to
70%		 Up to
75%		 Up to
80%		 Up to
85%
1st Charge 0.40% 0.45% 0.50% 0.55% 0.60% 0.65% 0.70% 0.73% 0.95% 1.05%
2nd Charge 0.45% 0.50% 0.55% 0.60% 0.65% 0.70% 0.75%

Top tips for Bridging

Generally, the lenders and valuers can be quick and an offer can be produced quickly. The main issue we find is our clients when our clients do not instruct a suitably experienced solicitor. We recommend you don’t use a property conveyancer, more used to assisting with main residence purchases and simple buy-to-lets. They might do the odd bridge loan, but often they are not geared up to move swiftly. We recommend that you instruct a commercial property solicitor.

As this is a commercial loan, you won’t have joint representation. this means that you will instruct a solicitor to represent yourself and the lender will instruct their own. You will have to pay for both!

For further information, please call the office on 0370 240 3007 and ask to speak to the commercial team.

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