London Bridging Loans
Bridging loans in London are specialist short-term loans that can provide temporary finance to bridge the gap between a purchase and standard finance.
They are often used to finance a property or land purchase at auction or through other means. Where a traditional mortgage can take weeks or months to arrange, bridging loans in London takes just days.
When speed is of the essence, that’s a significant advantage.
Key features of Bridging Loans in London
London bridging loans are short-term loans, typically between 1-36 months and interest is charged monthly.
Closed bridging loans will have a set payment deadline and provide the means to buy a new property while you arrange other finance.
Open bridging loans will have a maximum term rather than payment deadline, typically between 1-36 months.
You can typically borrow up to 75% LTV (Loan To Value) of property or land with a bridging loan. Higher LTV is possible if there are other assets that can be used as collateral.
The minimum amount is typically £50,000 with an effective maximum of £25 million.
Bridging loans are regarded as high risk finance and will be secured on the property or land like a traditional mortgage.
What can Bridging Loans be used for?
Bridging Loans are often used for fast property purchases of deteriorated or substandard properties, which developers are aiming to restore, convert, and re-sell for a profit.
Bridging Loans can be used for a number of circumstances including:
- Commercial Bridging Loans
- Bridging Loan Property Purchase
- Bridging Loan for Property Development
- Regulated Bridging Loan
- Auction Bridging Finance
- Bridging for Refurbishment
- 100% Loan Top Value (LTV) Bridging Loans
For example, they can be used to purchase a property to renovate into several apartments, you would buy them with short-term bridging financing, perform the conversion, then transfer it to a long-term mortgage.
If you’re considering a commercial property as an investment for yourself and require financing to make the property suitable for your business, then Bridging Loans are available as an option.
If you are part of a big residential housing corporation and would like to purchase the residence of your dreams, but the transaction is taking more time than anticipated, you can use a Bridging Loan to break the chain and acquire the property quicker.
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How much can I borrow using a Bridging Loan?
A bridging loan is a loan that lets you use a current asset to secure additional funding.
Lenders offer bridging finance with a high loan-to-value (LTV) ratio, so you can borrow up to 75-80% of the value of your current asset. How much you can borrow depends on the lender, but they usually offer up to 80% of the asset’s value.
Repayment terms for bridge loans are usually shorter than typical mortgage loans and may even be as short as one month.
The amount of time it takes to secure a loan will depend on the lender and their process, but many lenders have quick turnaround times for these types of loans.
With a bridging loan, you can get access to cash quickly and easily in order to meet your financial needs and goals.
How does London Bridging Finance work?
London Bridging finance is a type of short-term loan used to bridge the gap between two financial transactions.
It is commonly used for property development and is typically secured against the value of a property being developed. Lenders will provide bridging finance for property development, which can be obtained through a finance broker or directly from a lender.
The amount and duration of the loan are determined by the borrower’s need and creditworthiness, but usually lasts anywhere between 1 – 18 months.
London Bridging Finance enables borrowers to access funds quickly, as it often provides faster approval than traditional mortgages.
The loan may be used for various purposes including purchasing land, refinancing existing debt or making improvements to an existing property.
A broker can help borrowers find the most suitable lender, who can then provide bridging finance at competitive rates with flexible repayment terms.
Advantages of Bridge Loan financing
Bridge loan financing is an attractive option for borrowers who need quick access to capital.
A lender provides a bridge loan, also known as bridging finance, to enable a borrower to secure a mortgage or large bridging loan before the sale of their existing property closes.
The funds are secured against the equity in the property, so the higher the Loan-to-Value (LTV) ratio, the more capacity there will be to secure a loan.
Bridging lenders and finance lenders can provide these loans and brokers are often used to find the best deal.
Bridge loan financing is an effective way of quickly securing capital without having to wait for your existing property sale to go through first.
It can help you save time and money by allowing you to progress with your plans without any delays.
Disadvantages of Bridging Loan Finance
The main disadvantage of this type of loan is that the lender typically charges a high interest rate, making it more expensive than other types of loans.
Additionally, since bridge loan financing generally has a shorter repayment period than a mortgage, it may not be suitable for everyone.
As such, it’s important to carefully assess your financial situation to determine if bridge loan finance is right for you.
Furthermore, when taking out bridge loan finance, it’s important to understand that you must have sufficient funds available in order to make the full repayment on time or else risk defaulting on the loan and incurring further costs due to late payment fees and penalties.
Why should you use a specialist finance broker like GPS Financial?
A specialist finance broker like GPS Financial is the best way to secure the loan you need for your London property development. They have access to a wide variety of lenders and can bridge the gap between you and them.
GPS Financial have years of experience in finding loan lenders that are willing to provide development finance with competitive interest rates, making sure you get the most suitable deal for your needs.
GPS Finanacial are award winning property finance specialists, taking home the award for Best Firm: Bridging & Commercial in 2022, selected by Dynamo for Intermediaries, one of the countries foremost Mortgage Clubs.
We are specialists in bridging finance, with an extensive knowledge of the area and access to the best loan lenders available.
By using a specialist finance broker like GPS Financial, you can ensure that you get the right loan at the right rate and terms.
With our help, you can secure the funding necessary for your project with confidence.
If you need a bridging loan in London, contact GPS Financial today, fill out the contact form at the top of the page and one of our advisors will get back to you with expert advice and competitive rates.