How To Choose The Right Broker For Your Bridging Loan

So, you need a bridging loan. You should be as well informed as possible. Try to work out precisely what timescale you’ll need the money for and when you reasonably think you’ll be able to pay it back.

Don’t forget, the ideal situation for a bridging loan is where you are confident in knowing when you will have access to the funds to repay the loan eg. the future sale of a property. Your repayment plan is also known as your ‘exit strategy’ because its how you’ll complete the bridging loan. The more organised you are, the more likely it is that a potential lender will give you the loan that you want, as they will be confident that you will pay them back their money promptly.

What are my options for a Bridging Loan?

When considering which option is right for you, think about the following questions.

What are the terms of the loan? Terms can seem pretty similar between lenders, but that is not necessarily true. Make sure you understand precisely how lenders will charge interest and if there are any penalties for early repayment.

What are the interest rates + fees? There are often lots of different costs involved, so it is vital to get expert advice. That way, you’ll be able to properly understand which offer is most attractive and find the best bridge loan rates.

How long is the loan term? For bridging loans, this is usually up to 12 months, although lenders can offer bridging loans for longer at their own discretion.

What loan to value (LTV) are you borrowing at? You may be able to borrow up to 75% of the value of all property you can offer as security (this may allow you to borrow 100% of the purchase price of the new property).

Which lenders are right for your situation? Most lenders have a specialist area. For example, specific lenders have more experience with providing bridging loans for residential homes; others are adept at funding larger corporate projects.

Choosing the right provider

The first place people may begin looking is online comparison sites. Not all providers are listed on price comparison websites and they may not cater for customers with tricky or complex situations. Bridging Finance is a specialist area and it is always best to take advice from an expert in this field. Friends Capital will consider all client’s situations, even if they have poor credit or need to borrow a higher loan to value.

Comparison sites also remove the personal touch. If you are trying to get a loan for a home purchase, the process of deciding on and comparing bridging loans can feel very personal. Sometimes having direct contact with your bridging loan broker can be invaluable. Friends Capital will give you personal advice and tailor the terms of your loan specifically to you.

Some people choose to make financial decisions on things like bridging loans by talking to friends or family members. It can be comforting to work with someone who is recommended, so don’t be afraid to seek recommendations from people you trust for expert financial support.

Bridging loan case studies 2020

Here you can find examples of how bridging loans have helped customers move into their dream home without having to reduce the value of their current property.

Bridging loan case Study 1

October 2020

Mr & Mrs H were both over 60 & retired. Due to their age & pension incomes, a traditional purchase mortgage wouldn’t be available.

Their house was on the market for £900k (with no mortgage outstanding) & had been for a couple of months. They saw the perfect downsizing property on the market for £600k and had savings of £100k to put towards the purchase. We at Friends Capital, agreed to a bridging loan of £500k to secure the purchase, thus avoiding the need to reduce the price to enable a quick sale.

Bridging loan case Study 2

November 2020

Mr N was due to move into a new-build property last week but his buyer`s chain fell through.

He was under pressure from the developers to complete the deal, as this was the second property chain-break and they had other interested buyers. With a new-build property price of £450k, his current house sale agreed at £300k (with a small balance left on his mortgage) and with savings to use we arranged a bridging loan quote for £200k within an hour & a decision in principle the same day, funds were released to complete the chain within 10 working days.

Bridging Loan Case Study 3

December 2020

Mr & Mrs M are both retired. They have been approached to buy a converted barn close to them by the current owner who wants a quick sale.

They approached us to arrange short term finance, as they did not qualify for a traditional residential mortgage and their current property was not yet on the market, we advised that a bridging loan would be the best way to raise monies quickly.

The purchase price was agreed at £450,000. We raised £200,000 for Mr & Mrs M to add to their savings to enable them to purchase the converted barn before they waited for their house to sell. They are now in a position where they can wait and command a fair price for their exiting property.

Bridging Loan Case Study 4

December 2020

Mr C , a part-time landlord and sole trader spotted an opportunity locally to buy a detached property below market value from a previous visit to the property.

Unfortunately the occupant had passed away & the executors of the estate wanted a quick sale for their benefactors. They agreed to sell to Mr C if he could complete within 28 days before the house was put on the market. They agreed a price of £300,000 , our client had a £450,000 property to sell that wasn’t on the market yet, we arranged a £200k Bridging Loan within 3 weeks to complete the purchase.

Month: September 2020