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Guide to Residential bridging finance
Bridging finance exists to plug the financial gap for property transactions. It is commonly used with residential property purchases such as:
1. When a chain exists and the borrower wants to buy their next property before their existing one is sold.
2. When a buyer is purchasing a property from an auction
3. In any circumstance where the borrower needs access to rapid property finance, with the minimum of paperwork or hassle.
4. Where a residential property needs refurbishment before being sold.
5. Where a traditional mortgage cannot be taken out on a property, such as a residential property that is unfit for human habitation, pending remedial works. What sorts of features do residential bridging loans have?
Generous loan sums
Typically, residential bridging finance will be on offer from around £250k, depending on the lender, and up to £50 million or even more. Most bridging loans can also be taken out with a property LTV of around 80%. Other features such as open market valuations may be on offer.
Short timescales
Bridging finance is usually offered from one month to 18 months. These are not long-term loans, such as a mortgage, and the short timescale is reflected in the higher interest rate.
Offered on an experience basis
Many bridging loans are offered on receipt of a business case, redemption plan or other types of evidence that show how the finance will be used, what the plan is to repay it and that the plan for doing so is workable and in line with the lender’s risk profile. For example, more experienced property developers will naturally be able to borrow larger bridging loans at short notice than a first-time auction buyer. Speak to your broker to present your case in the best possible way, so that lenders can offer you the best deal. At Hans Zarihs we do this for all of our clients so that they can receive the right bridging loan offers for their needs. We are always clear, transparent and helpful – providing tailored illustrations and all necessary information to help with decision-making. Whatever queries you might have, we are here to assist.
Specialist lenders
Asking where can I get a bridging loan? The answer is probably with a specialist provider, accessed via a broker. Most residential bridging finance is offered via specialist brokers who work with a panel of property-focused lenders. This is a niche product that tends to be used by more experienced and sophisticated borrowers who are either developing their own property through auction or refurbishment means, who want to build a property portfolio or who are expanding a portfolio using a range of financial tools. A specialist broker, such as Hans Zarihs, will provide:
– Access to a large tried and tested panel of bridging finance lenders for residential bridging loans
– A rapid process with only a short form to receive initial quotes and offers
– Generous and flexible terms, designed around the customer
– A visible commitment to customer service
– Excellent reviews and a trusted track record.
Bridging finance: Tips for borrowers
Bridging loans are a specialty finance project and new borrowers should proceed with caution if they are new to property finance or development, or are unclear about the features of this short-term bridging finance product. Tips for success include:
Find the right bridging loan lender
Many borrowers will use a bridging finance broker because this type of product isn’t usually available through a high street lender. Look for a broker who can provide access to best in class lenders – many of whom will only offer finance through brokers and who don’t deal directly with customers. Find a broker with a large panel of trusted lenders and experience in the field. A fast process and ready access to funding, without lots of paperwork or hassle, is also crucial for most borrowers!
Calculate fees
Look out for a bridging finance provider that offers options for zero exit fee bridging loans. Exit fees can be expensive and are charged on top of the bridging finance administration fee and interest charges. Use the online bridging loan calculator at Hans Zarihs to see the effect that different interest rates, loan terms, and fees have on the total cost of borrowing. This total cost is important when weighing up different products.
Check for flexible bridging finance features
Look out too for flexible features such as the ability to roll over, deduct or service interest payments depending on your needs. Open and closed bridging finance deals may also be of interest to you, depending on whether you expect to be receiving sale proceeds or a mortgage income at a certain defined point, or you wish to keep the bridging loan facility open on a more flexible basis, pending confirmation of your redemption arrangements.
Look for great service
A good bridging loan broker or provider will always be committed to great customer service and will take the time to explain unfamiliar terms and to ascertain your individual needs in order to provide the right product. At Hans Zarihs, we only need a few minutes to gather all relevant information in order to send you an instant range of bridging loan quotes from a large panel of tried and tested lenders. The finance process is then extremely quick and we manage it for from start to finish, packaging up your application and managing the paperwork for your lenders so that you don’t need to spend lots of time on form-filling!
Speed and efficiency
We have also invested in the latest digital systems that allow us to operate on a slick, efficient and fast basis for the benefit of our customers. Not only does it just take around 20 minutes to return your personalized list of bridging loan quotes from our panel, once you submit your needs, but your finance can be made available in as little as 3 days, depending on the lender that you prefer and the bridging finance product that best suits your needs. We strive to be as rapid and as efficient as possible at all times, smoothing the process with our expertise and experience so that your funds will be with you as soon as possible. If the standard 3-7 day turnaround time isn’t quick enough for your project, please get in touch anyway and we will see what is available!
Contact us
Ready to apply for bridging finance or to find out more about bridging loans that might suit your next project? Contact our helpful team of finance experts now for an instant and no-obligation tailored illustration of the loans available to you.
Harper Harrison is a reporter for The Hear UP. Harper got an internship at the NPR and worked as a reporter and producer. harper has also worked as a reporter for the Medium. Harper covers health and science for The Hear UP.
