Bridging Loans: How Much Can I Borrow?
Depending on your circumstances, a bridging loan can be helpful in “bridging the gap”, whether for property purchases – downsizing or upsizing, development projects or financing a property bought at auction.
There are many applications for bridge finance, and the amount you can borrow depends on how well you meet specific requirements.
What is taken into account when borrowing?
• Your financial circumstances - lenders will still consider you regardless of tight financial circumstances or a less-than-perfect credit score. However, the process can be eased by expertise and direction on how to move ahead with securing a bridging loan. For clients, a broker can help with credit issues or find solutions to getting applications through.
• The valuation of assets - chiefly, if you have a property with a high value, you will be able to borrow more money. An evaluation is subject to the lender, who considers the security provided along with other factors. Therefore, we cannot outright improve the value of your assets, but we can ease the process by getting the right lender and expediting the application considerably. Getting a desktop or drive-by evaluation is one way of speeding things up.
• LTV (Loan-to-Value) - whether you can secure a loan for the total amount required will depend on the lender’s evaluation. An LTV is short-hand for the value of your property or asset, expressed as a percentage of the lender's willingness to provide funding. Our brokers can help you get the best LTV bridging loan for your circumstances.
• Location - where your property is located, and the pool of potential buyers can affect borrowing. These will be considerations for lenders during the application process. For instance, rural property or properties located in Scotland (North of Edinburgh-Glasgow belt) and Northern Ireland can be challenging when finding the right buyer. However, our brokers will help present a favourable application to the lenders considering these types of bridging loans.
What are the lower and upper limits?
There are no upper limits to bridging finance; the limits will be determined by the security you can offer. Ultimately, the bigger the security, the more you may be able to borrow. Typically, loans of this nature begin at £25,000 – if you need a smaller loan, bridging finance may not be suitable or necessary for your circumstances.
A bridging loan gives flexibility and options for borrowing; properties are not the only high-value asset you can offer in security to lenders. Other assets may come in the form of a pension, investment portfolio, fine jewellery and art or high-value cars. However, these assets must be valued at/over £1M to be considered a security.
Alternatively, you can offer multiple properties as security, and your equity in those properties will determine the upper limit of your borrowing potential.
The value of the assets you plan to offer as security must be sufficient to cover the loan - taking into account interest payments or additional fees. Therefore, it is essential to have an exit strategy correctly calculated before the application process and when considering the duration of the loan.
How we can help
By contacting us, you will have a better opportunity to secure the bridging loan that fits your circumstances best. When speaking to our experienced brokers, they will consider your case carefully and identify the best solution for you - we have access to a range of lenders in the short-term finance market, which would be unavailable to individuals directly.
Based on our experience, we know which lenders are suitable; the wrong lender may offer less or reject your application entirely.
We can judge the expected valuation and how much you will be able to borrow. Ultimately, you will have more choice in securing the best solution from the right lender.
Occasionally, repayment within the loan term may not always go perfectly. This could happen for several reasons that may be out of your control.
In cases such as these, re-bridging is an option we can arrange for your circumstances. If you are currently in this position, do not hesitate to contact our team to find a resolution.