You need to know the following:

  • How much you want to borrow: Lenders currently offer loans starting at 5,000 up to 2.5 million.

  • How much your property is worth: This affects how much you can borrow and the cost of your loan.

  • How long you need to borrow for: Bridging loans can last from 1 month to more than 2 years. If you have a set end date you can look at closed bridging loans otherwise you may need an open bridging loan which tends to be more expensive.

  • If you have a mortgage on your property: This affects how much you can borrow and whether you can look at 1st charge or 2nd charge loans. 1st charge loans are only an option if you have no outstanding borrowing attached to your property.

With all these details a good broker will be able to help you find the right bridging loan for your needs - most lenders do not offer bridging loans directly, only via brokers.

Interest rates on bridging loans

Bridging loans charge monthly interest rates as they tend to last just a few weeks or months, so just a small difference in the rate can have a big impact on the cost of your loan.

How this interest is charged can also vary and there are three main ways:

  1. Monthly: you pay the interest each month and it is not added to your loan

  2. Deferred or rolled up: you pay all the interest at the end of the term

  3. Retained: you borrow the interest for a set period and pay at the end of the loan

There also tend to be a large number of fees and charges to pay on top of the interest, so make sure you know exactly what you have to pay before you proceed.

Bridging loan FAQs

Q

How long does it take to apply for a bridging loan?

A

You can usually apply online and find out if your application has been approved within 24 hours.

Q

How quickly could the money be in my account?

A

If your application is approved the money could be in your account within 2 weeks, although you may be able to pay extra to process your loan faster.

Q

Do I have to be a homeowner to get a bridging loan?

A

No, but because they are secured loans you need an asset to use as security. For example, some lenders consider land as security for a loan.

Q

Can I get a bridging loan if i have bad credit?

A

Yes, some lenders will still consider your application even if you have bad credit, although you loan could be more expensive.

Q

Do I need a 1st charge or 2nd charge loan?

A

If you have a mortgage or loan on your property you need a 2nd charge loan. If there is no borrowing outstanding you can look at 1st charge loans.