How much can I borrow with bridging loans?
The amount you’ll be able to borrow with this type of finance, as with other types of loan or second charge bridging loans, will vary depending on your project.
Most loans of this type will start at around £10,000 and can go up to £250 million, and the amount you could get approved for will depend on things such as what the gross value of the project is when finished, what your track history is like, the terms and condition of the lender, what your credit rating is like, and whether you may need a business plan.
Bridging loan criteria will differ between lenders, however, generally speaking they’ll require that you have your initial mortgage with them too, that you put an asset forward as security, proof of your income, evidence of your track record when developing properties, and in some cases a business plan too.
It’s advisable to speak to a team member firstly so that they can get the details of your project and let you know what you may or may not need to complete an applications.
Once again, this will differ depending on which lender you go with, but generally speaking you could expect to pay somewhere in the region of 1.5% per month, which would equate to roughly 18% APR (Annually)
If you’re wondering what types of things people typically use second charge finance for, then we can give you a few examples here.
- If people are in a property chain and a gap develops in the completion date.
- If a developer or property manager has renovated their property and want to sell on very quickly
- For properties that are bought at auction
- If developers have an outstanding tax bill that needs paying quickly
- When a property is uninhabitable and needs to be renovated
Can a lender refuse a second charge?
Yes they can, but this will depend and differ between lenders. Your project, value and timescales as well as existing finance arrangements will have implications for whether you’re approved, which is why we recommend speaking to one of our specialist advisors beforehand.
What is the average cost of a bridging loan?
As well as the interest payments on the loan you’ll also pay an arrangement fee for setting up the loan on your behalf with your chosen lender. That will usually be between 1% and 2% of the total amount of the loan. An exit fee may also apply which covers the cost of paperwork and admin, but this all varies between lenders and depends on the amount you’d like to borrow on your loan and what your circumstances are.