To secure any type of bridging loan any applicant would need to be able to display to a lender their ability on how they intend repay the full loan amount. Examples of this would be selling the property to realise capital or simply converting a bridge loan to a buy to let mortgage to aid long term cash flow. A bridge to let finance product factors in the exit strategy immediately, this means at the point you the landlord start letting your property and need to switch to more attractive rates on a longer term deal, you are able to do so with the same lender. This saves time and hassle as you are not required to fill out multiple applications to secure finance.

You will need to compile the basic information most lenders require to gain any loan approval. For an individual or Company these tend to be the following:

Contact Info

Company Info

Director Details

Property Details

Property Valuation

Your business case for the property and exit strategy, this will include a detailed list of all works required to be done to the property and the main contractors that will be used to complete this.

Your background and property experience

Funding requirement

Proof of funds (deposit) and any additional security available to secure funding if required.

Rates are based on the applicant and the project and they will always vary from lender to lender. In most cases those with a clean credit history and a strong track record of property development or refurbishment can potentially expect to obtain attractive rates.

If the numbers for the project stack up and it is deemed viable there maybe lenders willing to consider taking up the option to facilitate a loan with someone who has an adverse credit history. However, due to the applicant’s profile expect to pay a higher rate of interest for the privilege of a loan to offset the risk to the lender.

Yes. Most lenders will use a metric based on the Loan to Value (LTV) of the property. For a bridging loan the maximum a lender may be willing to stretch is 80% LTV. In a nutshell this means that they would be willing to lend you up to 80% of the value the property is worth, for example if you have a house valued at £250,000 with an LTV of 80% this means a lender would be prepared to lend you a maximum of £200,000 with them taking a charge as security against the property. However the industry average LTV for buy to lets is around 75%, bear in mind in some cases the higher the LTV the higher the rates will be in order to pay back the loan. Things that can influence a lenders’ decision on a LTV is a valuation report and the term of the loan. If the state of property is deemed uninhabitable and if there is a huge disparity into what you think it is worth on completion of works the end is result is likely to be the lender offering a lower loan amount due to their perceived risk exposure.

The percentages quoted above are gross loan percentages i.e. before interest and fees are deducted.

As interest rates and fees vary from lender to lender but before you enter any deal it is wise to try and obtain an illustration of what a potential deal may look like if you were to proceed with a loan application. In some cases it may be more prudent to use a broker who has access to the whole of market to find you the best possible deal. These are list of fees or considerations to factor in:

Interest Rate

Product Fee – Usually payable on application

Valuation Fee – Usually payable on application

Assessment Fee

Funds Transfer Fee – Usually deducted from the advance

Loan Exit Fee – Usually 1% of the loan amount

Broker Fee

Solicitors & Conveyancing Fees