HOW BRIDGING FINANCE WORKS
1) We receive your enquiry with full questions answered. Unfortunately until such time as all the points are completed we are not able to respond.
2) On receipt of your answers we will contact you to verify the points and understand your requirements.
3) Based on your requirements we will forward to the lender that best suits your circumstances.
4) If there are no outstanding points we expect an offer or decision in principle subject to valuation and status. We aim to have this to you by the same day if sent into the lender prior to 12 noon. If not, we aim for the following day dependant on complexity.
5) The terms of offer or decision in principle will be sent out to the client the same day of receipt. These are for the client to sign and return confirming acceptance of the offer or decision in principle. In addition, some of our lenders do require clients to pay £350 (refundable on completion) lock in fee.
Nb: we require the above signed acceptance before 5 days after the offer or decision in principle has been issued. We would appreciate an e-mail should you decline the offer or decision in principle within the same time scale.
6) The lenders will send out a request for any additional information and documentation on the project they feel necessary to support your application. This is likely to include proof of income (pay slips if employed sa302 or accountants letter if self-employed/own business/ltd company) and experian credit report. We advise where possible to gather this information as soon as possible, as this will help speed up the process. The outstanding information will usually form part of the offer letter or decision in principle, this allows you to return everything required in one go which will help expedite matters.
7) Additionally the client will be required to pay any valuation fee (quotation for valuation will be sent on receipt of signed offer or decision in principle) which once received will enable the lender to book the valuation at the earliest possible opportunity.
8) On the return of the above information it would be helpful to have your solicitor’s details. Delay in doing so will hold up the process.
9) Once all the information has been received along with valuation fees this will be passed onto the lenders underwriting team to perform their due diligence plus also on to the lenders solicitors.
10) Once all information and due diligence has been checked and carried out satisfactorily this combined with the valuation report will go forward to produce the final offer.
11) The lenders solicitor will work in tandem with the clients solicitor to provide final offer and move forward to completion.
12) It is important that you liaise with your solicitor on a regular basis, especially if you have a deadline for completion. We nor our lenders cannot be held responsible for the speed of the process if outside our control. It is therefore important to ensure your solicitor provides you with all information and documentation that will be needed in order you can return to them in a timely fashion.
13) It is important that the exit route of the bridge or funding is very clear, and ensuring the sale of the property or refinance (into btl or commercial mortgage) is in place prior to the end of the chosen term of the bridge. Failure to do so could impose additional charges.
14) If the client doesn’t have a btl in place we are happy to refer you to a regulated broker should you not have one in place. It must be noted that we have no affiliation or responsibility with any such referral.
BRIDGING DEFINITIONS
We are not regulated by the financial conduct authority (fca) we only offer non-regulated bridging or funding.
If you are unsure or unclear about any information received, we recommend you contact an independent financial advisor.
What is the difference between regulated and non-regulated bridging
Regulated bridging. Is used for purchasing a property where the buyer intends to reside. This is usually done in the instance of a fast or quick purchase being necessary. For example, where a client is purchasing through a property auction as opposed to purchasing through a mortgage, which can take as long as 10 weeks and sometime longer.
Non regulated bridging. Is used for purchasing an investment property, usually in the instance where a client intends to let out (not to live in) the property or sell after refurbishment, this can be both residential or commercial property.
As above, normally this is done as the fastest or quickest way to acquire a property. Obtaining a buy to let mortgage as with a normal mortgage can take some considerable time, whereas purchasing through an investment property bridge can take as little as 5 working days (in exceptional circumstances) however we aim to complete inside 25 days, this of course is dependent on all information and documentation being returned swiftly, and also the speed of the legal representatives involved in the purchase.
Proof of exit of the bridge will be required by the lender on or before the agreed term of the bridge, exit is normally achieved through sale of the property or refinance through a buy-to-let mortgage. A dip or decision in principle will be required from a btl lender.
Are property investment bridges more expensive than btl mortgages?
Yes but they are used to expedite the purchase of residential or commercial investment property and only have a short term, therefore have a specific purpose and cannot be compared to a btl mortgage which usually has a much longer term.
What are the maximums I can lend?
In the current situation with covid the maximum most of our lenders are prepared to lend is 68% (loan to value ltv) of the purchase price. At a later date we expect a return to pre-covid maximums at 75%.
What fees can I expect to pay?
The lenders will usually charge an entry fee, usually a minimum of 2% of the gross loan. Additionally, we charge 1% broker fee which we feel is competitive in the industry. The client will pay the valuation fee and also their own and in some instances the lenders legal fees. If there are any other additional fees you will be notified at the earliest possible opportunity. Some lenders will charge a lock in fee which is refundable on completion. This is to ensure suitable funds are set aside for your project once acceptance is signed for and returned.
What is the difference between retained and serviced?
1. retained. This means all fees and interest chargeable for the term of the agreed bridge loan will be taken in full from the gross loan upfront, the net figure being what the client will receive. This means that the client will not have to make any interest payments throughout the term of the bridge, as all interest has already been paid for.
2. Serviced. This means the borrower pays the monthly interest each month but will receive a higher amount than retained (as they service the loan monthly) however, all fees will still be taken upfront (as above) and the net figure paid to the borrower.
What is the minimum & maximum loan?
£50,000 minimum
£5m maximum although larger projects considered.
PLEASE NOTE: Interest rates quoted are approximate as terms can change depending on current bank rate. Please contact us for the most up to date quote
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