Our short term bridging loans are for purchase, refinance, property improvement or to unlock working capital for business purposes.
This unique overdraft provides you with a flexible drawdown facility giving you instant liquidity and avoids heavy setting-up costs.
Individually structured development loans for residential and commercial projects, with finance available for site purchase, construction and fees, refinance, equity release and to provide working capital. Loans are available up to 90% of the site cost.
We have a commitment to innovation and with the ever changing financial landscape around us we have designed a range of unique Specialist Lending products that solve a range of property lending needs.
By Jonathan Rubins, Director & Chief Commercial Officer at Alternative Bridging Corporation
Understanding LTVs, CLTVs, and LTGVDs. How are they used by bridging lenders?
Bridging loans are designed to provide flexible short-term funding for property investors in need of quick access to capital. These loans are ideal for situations when traditional lending routes may take too long or greater flexibility is required.
We offer a range of flexible bridging loans at competitive rates that can be delivered swiftly.
At the heart of how bridging lenders assess risk and determine the suitability of a loan application are three important measures:
These ratios are essential for determining the security of a proposed loan and the overall viability of a project, especially when property development or refurbishment is involved.
LTV is perhaps the most widely recognised of the three. It compares the loan amount requested against the current market value of the property being used as security. For example, if a borrower wants to take out a bridging loan of £700,000 against a property valued at £1 million, the LTV would be 70%.
As a lender, we use the LTV ratio as an initial risk indicator. The lower the LTV, the more equity the borrower has in the property, and the less risky the loan is likely to be. A higher LTV, however, suggests that the borrower has less equity, which increases the potential risk.
As a rule of thumb, a good loan-to-value ratio should be no greater than 80%. Anything above 80% is considered to be a high LTV. Therefore, borrowers may face increased borrowing costs, require private mortgage insurance, or the loan may be declined altogether.
CLTV takes the LTV concept one step further by including all outstanding loans secured against the property, not just the bridging loan in question. If the borrower has an existing mortgage, this will be included in the calculation.
Using the same example as before, if a borrower has a £250,000 existing mortgage on a £1 million property and wants a £500,000 bridging loan, the total secured debt would be £750,000. This would result in a CLTV of 75%. This figure gives a clear view of the equity buffer available, taking into account not just our loan facility but the full extent of the borrower’s commitments secured against the asset.
CLTV also plays a role in how we structure loans. Where the CLTV approaches the upper limit of our tolerance, we may adjust loan terms accordingly, whether by offering a reduced loan amount, requesting additional security, or adjusting interest provisions. Our goal is always to structure funding in a way that protects the value of the asset while ensuring the borrower has sufficient support to meet their objectives.
LTGVD is a key measure used primarily in development finance. Rather than comparing the loan to the current value of a property, LTGVD compares the loan amount to the estimated future value of the completed project. This is especially relevant for borrowers who are seeking finance to acquire and develop land or to undertake significant refurbishment.
For instance, a developer might request £2 million to build a residential development that is projected to be worth £5 million upon completion. In this case, the LTGVD would be 40%.
Unlike LTV and CLTV, which are anchored to present-day valuations, LTGVD is forward-looking. It requires us to assess the credibility of the borrower’s plans, the feasibility of their construction timeline, and the strength of their exit strategy.
To arrive at a confident LTGVD figure, we may request detailed development appraisals, planning permissions, cost breakdowns, and professional valuations. The margin between the loan amount and the projected value must be sufficient to cover not only the capital and interest but also unforeseen costs, delays, or market shifts.
LTGVD is particularly important in assessing projects where the current site value offers little assurance, but the end result presents a strong financial prospect.
No single metric provides the full story. We use LTV, CLTV and LTGVD in combination to understand the short-term and long-term security position.
In practice, we consider:
We then combine these factors with:
A higher LTV or CLTV might still be acceptable if the exit strategy is particularly strong or if additional assets are offered as security. However, it’s the combination of these metrics and circumstances that shapes our lending decisions.
Each loan is unique, and these metrics provide a solid foundation for our decision-making process. Nevertheless, we also take into account the specific circumstances surrounding each case. This enables us to offer flexible, tailored solutions that balance risk with opportunity.
From a bridging lenders perspective, these metrics are central to both risk management and loan structuring. They inform our confidence in the proposal and guide how we price the facility and shape the terms.
A higher LTV or CLTV can potentially lead to:
However, a favourable LTGVD can support:
Understanding how bridging lenders assess risk can allow you, as a borrower, to present investment cases more clearly. It also minimises unnecessary delays and increases the chances of securing the loan you are seeking.
It also encourages transparency, sound planning, and constructive dialogue between borrower and lender. Where timing is critical and the stakes are high, these measures bring structure and discipline to decision-making, benefitting all parties involved.
If you have any further questions about LTV’s, CLTV’s and LTGVD’s in bridging finance, don’t hesitate to get in touch with our BDMs.
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