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A Guide to Quick Bridging Loans

Property News

A quick bridging loan offers speed for property investors and developers when looking to fund a new project or acquire a new property.  

What is a quick bridging loan?  

A bridging loan is what it says on the tin – it bridges the gap between a fast need for funds and a longer-term solution, such as a mortgage. A bridging loan is frequently used by investors to quickly purchase investment property. However, it can also be used for purchasing property at auction, property refurbishment and to exit your development finance facility.  

How quickly can a bridging loan be approved, and funds delivered?  

This is dependent on your personal circumstances, the complexity of the case and your preparedness.  

A bridge will typically take between 3 days to a few weeks to implement.  

What are quick bridging loans used for?  

Bridging Trends’ 2021 report showed 28% of bridging transactions in Q2 of that year were for the purchase of investment property. The property market is fast moving, and mortgage applications can take up to a couple of months to complete. A quick bridging loan allows investors to move quickly when they find a strong investment opportunity.  

Other scenarios where bridging loans were used include auction purchase, heavy refurbishment, and re-financing an existing project. 

How can I ensure a quick application process?  

You can speed up the application process by becoming finance ready and ensure you respond to information requests promptly.  

Likewise, using a specialist broker who is experienced in sourcing bridging loans will help you achieve a fast solution. Specialist brokers source bridging loans day in day out. They know each lenders’ individual appetites and will place your case with the right lender for your circumstances.

Specialist brokers also know which lenders are moving quickly in the current market. For example, some lenders will conduct an online valuation report to speed up the process or, they will accept title insurance in place of legal searches.  

How much can I borrow with a bridging loan?  

Typically bridging loans will cover up to 75% loan to value (LTV) however, we are seeing some incredibly aggressive rates with some LTVs reaching 100% of purchase price.  

Borrowing usually starts from a minimum of £75,000. The maximum amount you will be able to borrow is dependent on your personal circumstances and the details of the case.  

What are the benefits of using a bridging loan?  

Bridging loans are designed to meet market speed demands.  

Property demand continues to outstrip supply and competition in the market is fierce. Vendors very often go with the purchaser who can move the quickest. A bridging loan enables the investor to compete with cash buyers. 

Additionally, a bridging loan will allow an investor to snap up a good deal. For auction purchases we can obtain an AIP (Agreement in Principle) within 24 hours. This pre-qualifies a purchaser and gives comfort of source of funds to the vendor.  

When in the market for a quick bridging loan, what should you look for in a broker?  

When searching for a quick bridging loan you need a broker who knows and understands the specialist market. Ask your peers for recommendations and check the broker’s reviews and credentials to ensure they know this side of the market.  

Similarly, make sure you pick the right legal team. Choosing an experienced commercial property solicitor can speed up your transaction.  

A specialist broker is working on your behalf and should provide you with a thorough overview and explanation of the product. Always make sure you are happy with the terms and processes before progressing.  

How can you get finance ready to ensure a quick transaction?  

There are a few steps you can take to support a fast application. Preparing your personal documentation before application will give you a head start. This includes your personal identification, proof of address, third-party guarantee, evidence of assets and liabilities, plus bank statements spanning the past three months.  

Finally, work with a specialist broker who understands the complexities of bridging finance and can support you through the process along with an experienced solicitor.  

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