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08000 38 37 36Bridging loans are a type of short-term mortgage when a traditional one is not suitable. We can help if you are not sure whether a bridging loan is right for you or how to go about getting one. Our specialist bridge loan mortgage team can find you the right solution.
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A bridging loan is a short-term mortgage lending agreement where you can borrow a large amount of money for a short time. Traditionally, home buyers use bridging to 'bridge' the gap when buying a new property. Often our clients use bridging loans when the sale of their property is delayed but the new purchase needs to proceed.
As bridging loans are short-term, you will often need to pay off a bridging loan within 12 months, but the term could be longer or as short as a few weeks.
Bridging loans let you access money while you are waiting for funds to come through (for example, while you are waiting for the money from a house sale) but are paid off quickly once the money is available.
There are two types of bridging loans:
If you choose a bridging loan to finance a property, you will need to have an 'exit plan', which outlines how you intend to repay the loan within the specified term.
Whichever bridging loan you agree to, the lender will put a 'charge' on your property. This means they will be able to take repayments from the property sale if you fail to repay the loan.
Second-charge loans cost you more than first-charge loans as the second lender might not get their money back if you fail to keep up with the repayments.
It is important to note that your mortgage provider needs to consent to a second-charge loan.
Bridging loans can be used for a variety of reasons.
Businesses can use commercial bridging finance loans for virtually anything. However, as these loans have high interest rates and are only designed for short-term financing, they are usually used for large purchases like property. For example, if you are a property developer, you might use a bridge loan to buy land quickly.
Businesses might also use a commercial loan like a bridging loan to buy stock or to cover overheads if trading is reduced.
"Bridging loans are secured loans, so they work in the same way other secured loans do. The amount you can borrow depends on how much your security is worth (i.e., the value of your home).
Bridging loans can last anywhere from a month to three years but most bridging lenders will not let you borrow money for longer than 18 months. If you need longer than this to pay back the capital, you might want to consider other forms of finance such as a long-term personal loan.
As with all loans, you are charged monthly interest. You will need to pay this each month or as a lump sum at the end of the loan.
It is worth remembering that the longer you have your loan, the more interest you will need to pay, so it is better to repay the loan before the term ends to save money."
— Advisor working for Alexander Hall
The amount you can borrow with a bridging loan depends on your current financial situation and your credit history. You can usually borrow up to 75% loan to value (LTV) of the property you are buying. You can normally borrow more for a first-charge loan than a second.
To find out how much you can borrow, speak to our bridging loans specialists. We will craft a bespoke mortgage solution to help you finance the purchase of a new home without the restraints that can hold mainstream lenders back.
Bridging loans often work out more expensive than other types of loans. Open bridge loans are the most expensive.
Bridging finance rates vary by provider but will range anywhere from 0.5% to 2%. Although this sounds like a low interest rate, it is important to remember that these bridging finance interest rates are charged monthly. This means that the difference between a 0.5% interest rate and a 2% interest rate can be significant. You will also need to pay additional fees such as:
Most private lenders are not directly approachable as they work from third-party introductions.
Here at Alexander Hall, we have forged strong relationships with specialist lenders at some of the largest high street and independent banks. This means we can help you secure a competitive bridging loan that caters to your needs.
Bridging finance loans are a niche product so you must use specialist lending brokers who understand the intricacies involved to ensure you get the best possible deal. Our experts have the connections and know-how to create bespoke bridge finance solutions that can help you realise your property dreams.
You can rely on us to access funds quickly while still making sure you get the best possible deal.
Here is how our bridging finance process works:
We have been helping our clients get access to bridging loans for 30 years, so we know a thing or two about finding mortgages that tick all the boxes. Here is why you should choose us:
If you would like to come speak to us in person, we have offices across London. Arrange a bridging loan meeting with one of our expert brokers in:
Our expert mortgage brokers shine when it comes to securing tailored bridging loan solutions for a range of clients.
By getting to know you and your circumstances, we will simplify the bridge finance process for you. From finding the right lender to negotiating the best deal and sorting the laborious paperwork, you can trust us to take the stress out of your next mortgage.
To discuss a bridging loan for your next property purchase, contact our experts to arrange an initial meeting to discuss your requirements.
08000 38 37 36
Arrange a free appointment