Regulated Bridging Finance
The explosion in popularity of property development, property renovation and other forms of development, in recent years has also meant that there’s been a huge surge in demand for bridging finance and short term finance more generally.
It’s an extremely popular form of finance and an ideal solution to many short term issues, meaning that, despite mainstream banks and lenders broadly avoiding it, many other lenders have now started to specialise in this type of loan for their clients.
We’ve certainly seen a drive in demand for our clients as a bridging loan can often mean rapid access to finance and cash in situations that call for it and in comparison to more traditional finance, this type of loan tends to be much easier to apply for and be approved for in a short timeframe, making it attractive to sectors that can be unpredictable.
Bridging loans can be used for many different reasons and can be applied to lots of different situations, which is why many of our clients often approach us for advice on them and the market as a whole, so we’ve put together a handy short guide to regulated bridging loans.
What is regulated bridging finance?
Regulated bridging finance is usually used for property and is regulated by the Financial Conduct Authority. It becomes a regulated loan when you’re going to be living in the property or your immediate family will be rather than, for example, an investment property or a commercial property.
Regulation means that when you’re purchasing a property to live in, this falls under consumer law rather than if you’re buying the property or using the finance as a business or for business purposes, which then falls outside of a regulated bridging loan.
This type of loan is usually secured as a first charge on a residential property that you’re going to be living in.
Can I use a bridging loan for refurbishments?
Absolutely, bridging loans can be used for all types of things. Bridging for some refurbishments is actually a popular option for our clients as, for example, some banks won’t lend against a property unless it’s in a certain state of repair and so, for example, if you’re looking to purchase a property that needs some refurbishment works before agreeing a mortgage then a bridging loan could well be a good option for you.
The clue is in the name that a bridging loan is intended to be a short-term fix, so if you’re looking to plug a short finance gap then yes this will probably suit your needs.
Why use Hank Zarihs Associates as your bridging finance intermediary
We’ve got years of experience in the loan and finance industry, and especially with bridging loans and other types of bridging finance. Our specialists brokers have years of collective experience and have worked to fund millions of pounds worth of this type of loan in the past.
We offer you the best free advice on your finance needs and because we’ve built up long lasting relationships with our panel of lenders, we’re able to offer you exclusive rates and deals. We’ll also comb the market for the best possible bridging loans and other type of finance so that you don’t have to.
When it comes to this type of finance, we understand the stress that can be involved in approaching lenders individually, and especially if you’re in a situation where you need access to funds quickly. Because we work closely with this type of finance regularly, we’re often able to get finance to our clients within a matter of days.
We’ll help you through the application process, the paperwork required, meeting the criteria and throughout the process. We know that our clients want the reassurance and confidence of using a recognised, reputable and experienced intermediary, so we ensure that you can feel confident when speaking to us. .
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Bridging loan calculator
We’re always keen to be open with our customers, and so we’ve included our handy bridging loan calculator for you to get an idea of what this type of property loan may cost if you decide to take one out. Because they’re only short term they’re often more affordable and at better rates than a traditional loan, so this should illustrate that for you.
it’s perfectly straight forward, all you’ll need to do is fill in each field with your deposit, how much you want to borrow and the length of the loan.
What can regulated bridging finance be used for?
Regulated bridging finance can be used for a number of things, however, most of our clients tend to use this type of bridging loan for property.
Examples include to purchase an auction property, to raise funds on your current property to purchase your next one, to downsize a property or for refurbishment if you’re struggling to get a standard mortgage.
You could even use this type of regulated finance for things like a divorce settlement or to break a property chain.
What is the difference between a commercial bridging loan and an ordinary bridging loan?
Commercial bridging loans tend to be applicable if you’re buying a property as an investment, if you’re buying a property as a business entity, or if you’re buying a commercial property.
Bridging loans tend to be secured against a property, so the type of property and what you’re intending to use it for would dictate what type of finance you’re taking out.
A commercial loan would be, for example, if you wanted to buy an auction property as a buy to let investment but needed to do some refurbishments, these would then be classed as different types of bridging loans.
Are unregulated bridging loans safe?
Yes, we only work with reputable lenders and the main reason it’s referred to as unregulated is because it’s being used for business purposes rather than for you as an individual, hence the requirement for the Financial Conduct Authority to then regulate that type of finance as it becomes consumer related.
As with many other things, such as contract law or tenancy agreements, they’re not regulated in the same way as standard consumer products, where the consumer needs protection as opposed to business.
Are second charge bridging loans regulated?
In most circumstances they won’t be as many consumer finance companies won’t consider a second charge on a property as sufficient security against a secured loan.
When it comes to commercial property deals, however, lenders tend to not be quite as strict in this regard and are more willing to take on extra risk. Whilst second charge finance tends to remain quite a specialist area, we have plenty of lenders on our panel who will consider you for second charge loans if you meet their criteria.
Is there a minimum I can borrow?
The exact amounts you can borrow from and to will depend on the lender themselves as the loan needs to be at a certain amount to make things worthwhile for the finance company.
Because bridging finance tends to be shorter term finance, most lenders will expect you to borrow a minimum of around £10,000 but this can vary up to between £50,000 and £100,000 depending on the terms and length of the finance.
Because each lender is different, however, it’s worth speaking to one of our experts who can understand your situation fully, and it may be the case that a different type of finance may be the best for you, but we’ll talk you thro