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Stamp duty cut: What it means for you? Read Our Easy Guide
Stamp duty cut: What it means for you? Read Our Easy Guide
In the UK mortgage market, there are many lenders, from large lenders to small private lenders and each have their own lending criteria.
Some lenders will only lend where the risks are low, while other lenders will specialise in lending on the riskier propositions.
We have laid out a guide for the usual lending criteria to make things easier for you.
Term
A bridging loan is defined as a short-term facility ranging from 1 day to 12 months.
Most bridging finance lenders offer loan terms up to 12 months (for FCA regulated bridging loans) or 18 months (unregulated). Certain lenders will also offer short term loans for up to 36 months (3 years).
Some lenders provide short term loan facilities up to 36 months.
Secuiruty
When you decide to take out a bridging loan, lenders will want collateral against which they will be lending. Usually a property (or several properties) is used as collateral and this is known as the security property.
The lenders will place a legal charge on the security property (or properties), which will also be registered at the land registry as a first, second or third charge.
A first charge is when the security property has no existing mortgages on it. This kind of property is known as an ‘unencumbered’ property.
Second and third charges are placed on a property by the lender when that property already has an existing first charge on it.
Type of Property
Bridging lenders lend on the following types of porerty:
Out of all of these property types, residential properties attract the best interest rates because they are deemed by the lenders to be the most secure to lend against.
Other Types of Security
Property is not the only security that bridging loan providers will lend against. Certain specialist lenders will give you a loan if the security items are valuable, like jewellery, cars, antiques, precious metals like gold or platinum, art gems etc.
Condition of the Security Property
Unlike high street lenders, bridging loan providers do lend on properties that are in poor condition. This is why bridging finance is a good option to refurbish or rebuild this type of property.
Location
Location of the security property is a big factor in bridging finance. Some bridging lenders will lend only in or around London, while other may lend all over the UK, but the interest rates would be higher in these cases.
Age & Availability
Bridging lenders are able to arrange bridging finance for both individuals and businesses (limited companies, partnerships and offshore companies).
In the case of individual bridging loan applicants, the applicant must be at least 18 years old.
Credit History
Bridging lenders will lend to candidates with poor credit histories and also the following:
Evidence of Income
Most bridging loan providers will not need proof of income when assessing candidates for a bridging loan.
Purpose of the Loan use
When you apply for a bridging loan, the lender will want to know the reason you are borrowing. The following are the reasons a bridging loan can be used for:
Payment of Interest
Bridging loan interest can be payment monthly, or they can be ‘rolled up’. This means that the interest is repaid when the loan is redeemed. This is also known as deferred or retained interest. Most people choose this option over the monthly payments, as in case of monthly payments, proof of income is required.
Exit Strategy
Exit strategy means the plan a borrower has in place to repay the loan at the end of term. There are several exit strategies:
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REGULATORY
Bridging Finance Specialist is a trading name of TS Asset Management Ltd, a company registered in England and Wales with registration number 08225532. Registered Office: Suite-119, 8 Shepherd Market, Mayfair, London, W1J 7JY
TS Asset Management Ltd is an Appointed Representative of Ever North Limited which are authorised and regulated by the Financial Conduct Authority. Our FCA Number is 715827
Information Commissioner’s Office (ICO) Registration Number: ZA010161
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As a client of a regulated firm you have the right to take unsettled complaints to the Financial Ombudsman Service (FOS) which is an arbitration agency for complaints occurring in the financial services industry. Full details of the FOS can be found here.
WARNINGS
The Financial Conduct Authority does not regulate Bridging / Commercial loans and certain types of Buy to Let Mortgage and some investment mortgage contracts.
Your Home is at risk if you do not keep up repayments on your mortgage or any other loan secured on it.
Equity Release / Home Reversion – This is a Lifetime Mortgage or home reversion plan, to understand the features and risks, ask for a personalised illustration.
We provide a FREE loan matching service and work very with more than 100 lenders to be able to offer a comprehensive range of products. The terms of Loan, rates and policies vary depending on the lender and the applicant’s qualifications. All the content in this website is subject to the UK regulatory regime and is intended for consumers based in the UK only.
All the content on this website are for information purposes only and DO NOT constitute advice. Once you fill out forms in this website you will be contacted by one of our regulated financial advisors to help provide you with a customised quote depending on your situation and criteria. Our services are provided FREE OF CHARGE.
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