What is a Bridge Loan in Real Estate? Bridging Loan is a short term finance that enables businesses and investors to take advantage of opportunities which require transactions to be completed quickly. The focus on this type of finance is speed. It’s about closing the deal as quickly as required. Bridging loans give you a stronger negotiating position when buying property, enabling you to buy without a contingency on the sale of your existing property or other assets.
A Commercial Bridging loan can also be used for any legitimate purpose including investment property purchase, working capital, equity release, order fulfillment and similar requirements.
What is a Bridge Loan in Real Estate? It can be arranged starting from £500k – £Unlimited on a first or second charge basis. A typical bridging finance loan to value (LTV) is 70-80% against the Value of the property, with 100% possible if additional security is available. You can usually get a term from 1 month to 12 months from as low as 0.99% per month.
When can you get a Bridge Loan in Real Estate? If you:
Need to raise funds in a few days (48hours is achievable)
Require a second or even third charge on a property
Have a poor credit history
Have no accounts or proof of income
Need to pay off arrears
You can base your Bridge Loan in Real Estate on any Asset such as:
Land with or without planning
Bridge Loan in Real Estate – reasons for Loan Redemption can be:
An expression of interest letter from a bank
A concluded missive to sell on
A mortgage offer
A decision in principle letter from a bank
Development finance offer letter for post acquisition
Any proof of ability to repay loan after term
Bridge Loan in Real Estate Summary:
Term: 1 Month – 12 Months
Max Loan to Value: 70-80% of the (OMV/FSV) less fees, costs and interest.
Rate: From 0.99% per month
Entry Fee: From 1%
Exit Fee: From Nil to 1 Months Interest depending on bank
Legal Fees: On a case by case basis
Adverse Credit: Usually accepted but explanation required if heavy
Bankruptcy: Accepted as long as discharged
Within the amount of the loan, it is possible to roll-up interest so that your monthly finances are not disrupted. You should be aware that this will increase the amount that you have to pay back. Also, it is possible to arrange a facility without a redemption penalty.