Bridging Loans

we lend From £50,000 to £1.5m

BREEZE CAPITAL SPECIALISE IN PROPERTY FUNDING: BRIDGING LOANS & PROPERTY DEVELOPMENT FINANCE

Bridging Loans are also known as short term loans and were traditionally used to enable people to buy property at auction. Quite often, auction property is not only uninhabitable, it is also unmortgageable so the only way someone would buy a property at auction was if they had cash.

Not any more.

Bridging loans are used all the time…To buy property at auction is just one aspect of their uses but borrowers also use them to buy land that hasn’t yet got planning permission, buy a house below market value (BMV), buy a farm, office, warehouse or even a hotel that a traditional mortgage lender wouldn’t lend on.

NB: If you are looking for a bridging loan for property development, visit this page

However, it is worth pointing out that a bridging loan may not be the best option in many cases and it’s important that you do your research and fully understand the risks involved.

Whilst it may seem like a great idea or a ‘quick fix’, the reality is that a bridging loan will not be for everyone.

The last thing to note is that Natwest, Barclays and other high street banks do not offer bridging loans.

Breeze Capital Chester

We are the ‘goto’ lender for property professionals throughout the UK looking to fund residential, commercial & industrial property.

OUR BRIDGING LOANS SUMMARY:

No broker fees
Heads of Terms produced within 4 hours of your enquiry
Bridging Loans from £50,000 to £1.5m
Loans available on residential, commercial and industrial properties
Industrial units and industrial estates in England & Wales
Land with planning up to 50% LTV
Refurbishment bridging loans up to 85% LTV
Interest can be rolled up (paid at the end when you sell or refinance the property), deducted from the initial loan or serviced (paid monthly)
Loan terms from 3 months to 18 months
Portfolio bridging available if you have a number of properties that need refinancing
Modular construction finance
Bespoke, speedy service for large bridging loans above £1m

Apply for a bridging loan today

Click here to get a free quote

What is a bridging loan?

Bridging loans are a type of funding that allows you to “bridge the gap’ before additional, more longer term finance is available.

Yes it is like a traditional mortgage but the major difference is, it allows you to buy a property or land without having to worry too much about your credit history.

You see a bridging loan is based on the asset, in most cases property but also land.

There are over 300 different bridging lenders in the UK (yes, 300!)…Some are major financial institutions like banks and some are specialist lenders you may have heard of like Aldermore or Shawbrook.

However, there are literally hundreds of smaller, alternative finance lenders who generally take more risks than the big banks and this allows them to lend against unusual or unmortgagable assets.

It could be buying a house at auction. It may be buying another property before you have sold your existing one or it may even be because you want to buy a piece of land that doesn’t currently have planning permission.

Whatever the reason, a bridging loan can be quick and relatively simple to apply for. As most lenders are looking at the value of the security (land or property) and not you, it enables them to lend money quickly and with little fuss.
Do banks offer bridging loans?

If only!

Everyone asks this question but the simple answer is no, they don’t. Or rather, most banks don’t. The usual excuse is that offering a bridging loan is riskier than offering a residential mortgage for example and we get that. Natwest, Barclays, Lloyds, Santander…None of them offer bridging loans.

However, if you choose the borrower carefully, the quality of the asset or security is good and you do your usual lender due diligence, then there is absolutely no reason at all why banks and other high street lenders shouldn’t offer bridging loans.
Are bridging loans expensive?
Compared to a normal mortgage then yes, they are.

But you have to remember…These are risky products for lenders. Yes, if it goes well then both the borrower and the lender can earn a LOT OF MONEY.

However, if they get the deal wrong then both the lender and borrower could be in a lot of financial trouble.

There are however other costs involved that people forget to take into account. They are:

Legals costs. Both yours and the lenders legals fees are paid by the borrower and this is pretty standard right across the short term lending sector.

Valuation fees. You will have to pay for a full valuation for lending purposes.

QS and QS monitoring fees. If you are looking to purchase a property or land with a bridge and then build on that land or knock down the property and build on the land, then you will need development finance too. A Quantity Surveyor (QS) will have to complete an initial report that you the borrower will have to pay for. You will also have to pay for the QS every time they go out to site to check the progress and to release funds from the lender.

So in summary, you have to pay for:

Your valuation

Your legal fees

The lenders legal fees

The QS initial report

The QS ongoing interim reports

And even after all of this, you may still have to pay stamp duty, VAT, professional fees for an architect, planning application fees and so on.
Can I get a bridging loan with bad credit?

Yes you can but it varies from lender to lender.

Sometimes this type of lending is known as non status lending.

Traditionally, bridging loans were quick, short term loans for property developers, landlords and entrepreneurs.

So any lenders in this market knew they had to be fast and the fastest way to lend to someone is by basing that lending solely on the asset. i.e. The building or land.

Just because an individual has bad credit does not mean the deal is a bad one. Far from it however each lender has their own credit policy and here at Breeze Capital, we generally do not lend to borrowers with poor credit.

Imagine this for a lender. Same property.

Borrower with GOOD CREDIT wants to borrow £75,000 against a property value (and purchase price) of £100,000.

Borrower with BAD CREDIT wants to borrow £30,000 against a property value (and purchase price) of £100,000.

The risk to the lender on scenario 2 (bad credit) is far less because there is such a gap between what they are lending and what the property is worth.

So if the property is valued 12 months after purchase and it has down valued to £85,000, because of bridging loan interest and fees that need to be added to the loan, it is unlikely that the lender will make any money on this property and in fact, will probably be owed more than the property is worth.

The bad credit scenario leaves the lender with a lot more headroom in case the property does get down valued.

However, the only exit route for a borrower with bad credit is to sell the property as they will not be able to refinance, so that is a huge risk to most lenders including ourselves.
Can you extend a bridging loan?

In some cases, yes you can.

However, a number of lenders will charge extension interest so for example: You have a 12 month bridging loan and are paying 1% a month.

You ask for a 3 month extension and the lender says ‘yes’ but they will also charge you an additional 1% a month on top of the 1% a month you are already paying.

Here at Breeze Capital, we look at each case on its own merits, no one size fits all.
Can I get a bridging loan to buy a house?

If you are struggling to sell your own house and want to buy your dream house (whilst still hanging on to yours until it sells) to avoid someone else buying it from under you, then again, a bridging loan could be ideal.

For the purposes of clarity – Here at Breeze Capital we will be unable to provide you with a bridging loan if you wish to purchase a residential property you are looking to live in or have previously lived in.

If you want to buy a piece of land and build your perfect home on the site then you would use a combination of bridging and a development finance loan.

Because this type of short term lending is usually only for a maximum of 12 months, it means that they are unsuitable for anyone who wants to use them to purchase a property that they will live in permanently (quite apart from the whole other issue of regulated lending)
How much can I borrow?
What types of things do you lend against?
Can you get a bridging loan to buy land?

Yes you can.

Most lenders will require the land to have full planning permission however some lenders will allow the purchase of land without planning permission but will restrict how much they lend.

Land with planning is usually up to 50% LTV and land without planning is virtually impossible to fund from mainstream sources.

At Breeze Capital, we lend up to 50% LTV for land with full planning permission.
Is a bridging loan the same as a commercial mortgage?

Pretty much.

A commercial mortgage (or business mortgage as it is sometimes known) is used to buy property over a long term, usually 10, 15 or 20 years.

A bridging loan can be used for exactly the same thing but can only be used for a short period of time, usually 12 months.

The other major difference is cost.

A commercial mortgage is a lot cheaper and rates can be as low as 3.5% pa compared to a normal bridging loan rate of 12% pa. When you apply these interest rates to loans of £1m+, the difference in cost can be staggering.

However, a bridging loan is much easier and much quicker to obtain than a commercial mortgage.
Can you use a bridging loan for a deposit on a house?

No.

The structure of a residential mortgage is completely different to the way investment type mortgages work.

Your residential lender will have taken certain checks on your ability to purchase the house. This may be through affordability and credit checks but either way, their decision to lend to you will have been based on your ability to put down a deposit on that property too.

They simply would not allow the borrower to obtain bridging finance to use as the deposit on a house.

The other reason why you can’t use a bridging loan for a deposit on a house is because this type of bridging would be regulated which means the lender in question would also have to undertake affordability checks and so on.

Based on this criteria, the bridging lender would not be able to make the deal work. Breeze Capital are not regulated by the FCA.
Can I use a bridging loan to self build?
You can and this type of lending is known as development finance.

The way it works is this:

You obtain a bridging loan to buy the land unless you already own it. The land must have planning permission.

You then obtain development finance which is released to you in stages or drawdowns as they are known in the industry.

As each stage of your build is completed, you will contact your development finance lender and they will arrange for their Quantity Surveyor (QS) to come out.

Once the QS reports back to the lender and confirms that the work completed is satisfactory, the lender will release the money to the borrower so they can pay their builder or other contractors for the work done.

A development finance loan is usually taken over 18 months and is based on a 12 month build schedule and a 6 month sales period.

Important: Breeze Capital does not provide development finance or bridging loans to anyone looking to build a house that they or a family member will live in. Our loans are purely for investment purposes.
Can a limited company get a bridging loan?

Yes they can and more often or not, a bridging loan is usually taken out by a limited company rather than an individual.

In most cases, the limited company has been set up with the sole purpose of buying a property. This type of borrowing structure is known as an SPV, short for Special Purpose Vehicle. This simply means that the company has been formed with the sole intention of buying a property and that after the transaction has been completed and the property sold, the company will usually cease to exist.

Recently completed loans

HMO conversion in Handbridge Chester City Centre

HMO conversion in Handbridge, Nr Chester City Centre

£626k Bridging Loan
59% LTV
Rate of 0.92% pm
No exit fee

House refurbishment in Llandudno, North Wales

£445k Bridging Loan
62% LTV
Rate of 0.95% pm
0.5% exit fee

Office to residential conversion in Tarporley, Cheshire

£912k Bridge Loan
70% LTV
Rate of 0.79% pm
0.5% exit fee

Apply for a bridging loan now

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Latest Bridging Loan New

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Bridging Loans

we lend From £50,000 to £1.5m

BREEZE CAPITAL SPECIALISE IN PROPERTY FUNDING: BRIDGING LOANS & PROPERTY DEVELOPMENT FINANCE

We are the ‘goto’ lender for property professionals throughout the UK looking to fund residential, commercial & industrial property.

OUR BRIDGING LOANS SUMMARY:

No broker fees

Heads of Terms produced within 4 hours of your enquiry

Bridging Loans from £50,000 to £1.5m

Loans available on residential, commercial and industrial properties

Industrial units and industrial estates in England & Wales

Land with planning up to 50% LTV

Refurbishment bridging loans up to 85% LTV

Interest can be rolled up (paid at the end when you sell or refinance the property), deducted from the initial loan or serviced (paid monthly)

Loan terms from 3 months to 18 months

Portfolio bridging available if you have a number of properties that need refinancing

Modular construction finance

Bespoke, speedy service for large bridging loans above £1m

Apply for a bridging loan today

Recently completed loans

HMO conversion in Handbridge, Nr Chester City Centre

House refurbishment in Llandudno, North Wales

Office to residential conversion in Tarporley, Cheshire

Apply for a bridging loan now

Latest Bridging Loan New