Bridging Loans

Profitable property supported by fast and cost effective loans to bridge the gap with the highest Loan-To-Value (LTV) and lowest interest rate possible.

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Loan up to 75% of the value
75% LTV
Minimum loans from £25K
£25K
Competitive interest rates from 0.53% pcm
0.53%

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What is a bridging loan?

A bridging loan is a short term loan which is used as a temporary loan until a more permanent finance can be secured. For example if you want to do a property up by adding value to sell for a profit, most property developers would use a bridging loan.

This is because 75% of the purchase price is likely to be covered by the bridging loan, therefore meaning as the property developer you only need to put in 25% cash towards the purchase price plus stamp duty, legals, insurance, refurbishment costs and interest expenses.

When the majority of the cost is covered by a bridging loan, it means the returns on capital invested to the property developer should be higher (as long as the planned exit is achieved).

Bridging loans explained

Bridging Loan Calculator

Please use our bridging loan calculator to work out what you could potentially borrow!

£
£
Indicative quotation
Total Security Value [1] £250,000.00
Net Loan Amount [2] £100,000.00
Retained Interest Period [3] 6 months
Net LTV [4] 40.80%
Interest Rate [5] 0.55%
Total Arrangement Fee (2%) £2,000.00
Interest Retained £3,412.62
Gross Loan Amount £105,412.62

Send this indicative quote directly to Teal Finance and we'll continue from there, email it to yourself or whom it may concern.

Notes:
  1. Total value of the property the loan is secured against
  2. The loan amount you need to be available to you
  3. The number of months that interest accrues
  4. Loan to Value
  5. Monthly interest rate (indicative)

Please note, this is an indicative calculator. The figures displayed are subject to the lender's approval and due diligence.

Bridging loans explained in full

How does a bridging loan work?

There are many uses of a bridging loan but the main one is to finance property development. It could be used to purchase and renovate a property, or buy a property at auction.

There are two main types of bridging loan, open and closed.

Open bridging loan

Open bridging loans are more flexible and do not have a fixed exit date, but normally it is completed within 12 months.

Closed bridging loan

Closed bridging loans have a fixed exit date in place and are normally used if the sale of an existing property is near completion with fixed contracts in placed.

How much does a bridging loan cost?

Due to the short term nature of a bridging loan they tend to have a higher interest cost than your traditional buy to let or commercial mortgage product.

The cost of the monthly interest will either be deducted upfront or rolled up (added to the loan).

Ultimately, the deciding factor is the purchase price you pay for it and the loan amount required.

There will also be both an arrangement and exit fee of the loan, as well as admin costs.

How much can you borrow with a bridging loan?

Through Teal Finance, you have access to over 11,000 lenders so the maximum you can borrow depends on the security you have to back it up with and the feasibility of your exit strategy. The minimum our brokers can facilitate is a bridging loan size of £25,000.

Eligibility: How to qualify for a bridging loan?

The lender will normally want to be able to see your repayment strategy and it is advisable to have a back up plan in the event your exit plan falls through as they will want to be able to see you can still pay the loan back.

Qualifying for a bridging loan in the UK is straightforward and easy, applicable for:

  • An individual, partnership or limited company.
  • People who are employed, self-employed or retired.
  • People over the age of 18 - some lenders will have an upper age limit.
  • People who live in or have a registered address in the United Kingdom.
  • People that have a form of security, such as one or two properties.
  • Purchasing or refurbishing residential or commercial property.
  • A clearly defined exit strategy from the bridging loan - such as selling the property, refinancing or money due within the duration of the term.
  • A loan amount of at least £25,000.

The criteria of each lender varies which is why it can save you time and money to use an experienced bridging loan broker at Teal Finance, who can quickly structure a professional proposal for reaching out to and negotiating with the most suitable lenders on your behalf.

What is the difference between first and second charge bridging loans?

A 'charge' is a legal agreement that takes your property as a form of security and prioritises the order in which lenders will be repaid if you fail to repay your loans.

First charge bridging loans

If you own your property, or you're using a bridging loan to complete the repayments on your existing mortgage, your bridging loan will become the first reciptent to charges should you fail any repayments.

Second charge bridging loans

If you're bridging loan isn't being used to complete the repayments of your existing mortgage, the existing mortgage would be paid towards first if you fail to make repayments.

What is the difference between unregulated and regulated bridging loans?

The regulatory principle of a bridging loan depends on whether the borrower intends to secure the loan against a property they will be occupying or if it used commercially for business.

Unegulated bridging loans (Business)

When a bridging loan is secured against a commercial property for business purposes, the borrower is expected to assess and understand the contracts they are to sign. Therefore, a company authorised by the Financial Conduct Authority (FCA) isn't required to facilitate a bridging loan by regulating it.

Regulated bridging loans (Personal)

When a bridging loan is secured against the borrower's primary residence or where they plan to move, it becomes the responsibility of the broker or lender to ensure the borrower fully understands the contracts they are to sign and that their exit strategy is achievable. For regulated bridging loans, Teal Finance Ltd, which is authorised and regulated by the Financial Conduct Authority (FCA) (No. 923626), is required.

Auction Properties

Step into the Auction House secured by a fast and cost effective bridging loan.

Why choose us?

Access to more lenders

Whole of market brokers with access to specialist lenders and the experience to get you a highly competitive rate.

Property professionals

We specialise in bridging loan and development finance cases so you can rely on an innovatively structured deal.

Fast, expert service

We liaise with all involved on your behalf to ensure deadlines are met and drawdown is made in a timely manner.

01603 574404

We work closely with specialist lenders, private funders, high street lenders and challenger banks and we know how to put together the best bespoke deal.

Lucy O'Mara

CeMAP - Finance Broker