What is a residential bridging loan?

Residential Bridging Loans are a short-term property finance solution.

Think of residential bridging loans as short-term mortgages. Like a regular mortgage, a bridging loan is secured as a charge against your property. You pay interest on the loan and the amount you can borrow is determined by the property’s value and period of the loan.

Unlike a typical mortgage, a residential bridging loan isn’t designed to be a long-term arrangement it is a short-term finance solution– ours typically last 3-24 months. That’s a reflection of the different tasks residential property loans are required to do. A mortgage is designed to pay for a property over a prolonged period. A bridging loan is designed to help you over a specific short-term financing hurdle.

Who can take out a residential bridging loan?

Essentially, there are two types of residential bridging finance applicants:

Owner occupiers: people who plan to live in the property they’re buying; and

Residential property investors: people who intend to buy residential property not to live in, but to rent out or sell-on.

Each group will have differing reasons for choosing a bridging loan.

How bridging loans for residential property can help you

Owner occupiers

Beat the chain: Suppose you’ve discovered the perfect house and you know there’s going to be lots of competition for it. The seller is likely to choose the best chain-free offer, but if you haven’t yet sold your house – or you’re stuck in your own chain – your offer is unlikely to appeal.

With a short-term residential bridging loan, however, the chain becomes irrelevant. You get the money you need to buy the home now, which you pay back after your current home sells.

A better deal: Speed can be essential to getting a great property deal. Whether you’re buying at auction or wanting to take advantage of a seller’s discount for a quick sale, a short-term bridging loan can be the key to getting a better deal. And unlike a mortgage, it doesn’t take months to arrange.

Improvements needed: Mortgage lenders want to know that the money they lend is safe, so they won’t put it into a property that’s going to fail a survey. Those are, of course, the cheapest properties to buy, and that’s where residential bridging loans can help. Use the loan to buy the property and make improvements that increase the property’s value and mortgage-worthiness. Then mortgage the property and pay off the loan.

Residential property investors

Property flipping: There’s no deal better than a property you can buy at a low price and sell for a healthy profit almost immediately, but flipping requires fast, flexible access to funds. Residential bridging loans are perfect for the job.

Redevelopment: Property development requires capital. It’s not just the purchase price; it’s the funds you’ll also need to redevelop the property. A bridging loan can give you the financial space to put your plans into action, and you can repay the loan from the proceeds of sale or from the mortgage you’ll be able to secure more easily on your newly renovated property.

How much can I borrow?

For owner occupiers, our residential bridging loans start at £200,000. The maximum loan is £10,000,000. For residential property investors, the minimum loan for a first and second charge is £200,000 with a maximum of £10,000,000.

What is a charge?

A charge is a legal right that anyone lending money can secure against the borrower’s property. In England and Wales, legal charges are registered at the Land Registry. A typical mortgage lender will place a charge on your property when they agree a mortgage, and a bridging loan company will do the same.

Having a charge on your property means you can’t sell the property or raise money against it without approval of the first charge holder. It also means that if you default on your loan/mortgage repayments, the lender can force the sale of the property to get their money back.

A first charge, as the name suggests, is the sole or primary charge on the property, taking precedence against any other charges. A second charge is a legal interest in a property that is secondary to the first charge, but which supersedes any later legal interest.

In the case of owner occupiers, we will offer bridging loans for residential property where we hold the first or second charge. In the case of residential property developers, we will offer a larger loan as holder of the first charge.

If your bridging loan will be a second charge, you’ll need the first charge holder to consent.

What are the benefits of bridging finance with ABC?

Size of loan and speed are the major benefits. Attempt to raise short-term finance loans via traditional routes and the opportunity will often have evaporated long before the decision is made.

Bridging finance with ABC is different. You submit your request and details of the security. We provide a decision in principal almost immediately. That then leaves you free to press ahead with your property purchase or re-development while we get everything finalised.

Will you say yes?

We say yes all the time. Partly, that’s because we’re the making the loan, so we don’t have the pressures and limitations other lenders might have. But mainly, it’s because we approach the whole concept of short-term bridging from a different perspective to many of our competitors. We work harder to find a reason to say yes, simply and swiftly.

Let us say yes to you.

Find the right short-term residential bridging loan for you now.