What is a Bridging Loan?
Bridging Loans are generally taken out when you have a short term requirement or you need to find money promptly. Bridging loans are normally repaid within 12 months as the rate of interest makes it too expensive to borrow for much longer. Property developers and investors have been using bridging loans for many years to take advantage of market conditions or investment opportunities. Being able to purchase a property quickly offers many advantages such as negotiating the best price and beating the competition. One of the most popular uses of Bridging Loans is when investors want to purchase a property at auction. You normally have 4 weeks to complete on the purchase from the day of the auction. You will have to put down a10% deposit that could be lost if you fail to get the funding in place so it is critical you go with the right lender.
How much can I borrow?
If you have the security with enough equity you can borrow up to ВЈ10m however there is limited choice for the very large loans in the current market. The average bridging loan is ВЈ500,000, with the minimum you can borrow being ВЈ30,000. All bridging loans are secured on either commercial and residential property or land. It is possible to get up to 100% of the market value if additional properties are used as security.
How quickly before I get a
Confirmation can normally be made within minutes, however, an advancement of money into your account can take anywhere from anywhere between 6 to 7 days and 3 to 4 weeks, depending on your circumstances. The economic down turn has made lenders take a more cautious approach to lending compared to previous years, their main concern these days is that they are going to get their money back. Lenders need to be confident that if they loan you money, you will in turn 1) refinance the property for more than the bridging loan 2) sell the property for more than the bridging loan. If you can reassure them on these two points, your application should be successful.
Applying for a loan check-list
When you apply for loan, you should ensure that you go through the checklist of everything that'sВ required and have any paperwork to hand. This will make the application process much faster and more efficient. The documentation required when applying for a loan will vary according to different lender requirements; however, you are likely to be asked for the following: Proof of identity, including proof of name, verified photograph and proof of address - this could be a driving licence or passport Utility bills, such as gas bill, electric bill, mobile phone bill Bank statements usually from the last 3 months Payslips or accounts reference usually from the last 3 months
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