Bridging Loans

A bridging loan is a short-term interest-only loan available to those that need immediate access to capital. Usually used for a property purchase, it is a loan to ‘bridge’ the gap while other finance (such as a mortgage) is secured by the borrower. Bridging finance is secured, meaning the borrower uses property (or land) as security to the lending institution.

Bridging loans are mainly used by clients who need quick, short-term capital to fund a property purchase. They include those who:

• need to complete quickly. This might include property developers, who often have the opportunity to secure a great deal if they can complete quickly.
• buy through a property auction. Bridging finance is popular with those buying property at an auction. Here, completion has to take place within 28 days, which means traditional financing is not usually an option.
• are in a broken property chain. A bridging loan enables a seller of one property to secure their new property before the sale of their existing property goes through.
• want to buy an uninhabitable property. Traditional lenders will often not lend on a property if there is no kitchen, bathroom, central heating or running water (especially buy-to-let mortgages). A bridging lender will base its lending on the property’s value in its current condition, however. This enables the buyer to access the property and work on it to make it habitable.
• are renovating or developing a current property. A property investor may want to renovate a property within a few months and either sell it on or refinance. A bridging loan can often be the perfect vehicle for this short-term capital requirement.
• have to get planning permission. In order to obtain planning permission and secure development funding, the developer may need immediate access to capital.
• need a lease extension. When a property has a short lease, a borrower will likely be refused a traditional mortgage. A bridging loan can be used to extend the lease, which then makes the property mortgageable through conventional lenders.

No. We lend on residential, semi-commercial and commercial properties and land. The construction, type or use for the property doesn’t matter either.

No.

A credit check is not carried out by West One unless we are given permission to do so by your client.

Since bridging loans are for the short-term, each client must have a plan in place to pay off the loan. This is known as an ‘exit route’. A viable exit route is a must on all bridging loan applications.

As a short-term finance solution, a regulated bridging loan is generally taken out for up to one year. However, it is not uncommon for some unregulated bridging loans to last for up to two years.

Our experience means that in most cases we will be able to confirm almost immediately whether your client’s application is likely to be successful.

Once we receive the application form, we will instruct solicitors and the valuation simultaneously. Once the valuation report and legal due diligence has been completed, we will then issue a Facility Letter (or Mortgage Offer) alongside a suite of legal documents for the borrower to sign. Funds will then be sent to the solicitor for completion.

Each case is reviewed individually. However, if all the paperwork is complete then a client could receive funds in as little as 48 hours.