How To Get Bridging Finance? Explained

What is Bridging Loan

Whenever a borrower wants to take bridging finance, the main concern is the maximum loan amount or LTV that a provider is offering. Therefore, it is essential for you as a borrower to be aware of the lending criteria and critical requirements for obtaining this type of debt.

Many bridging loan providers are strict about the maximum LTV they offer, but there are circumstances when they are likely to provide a loan with 100% LTV. In this article, we describe what 100% bridging finance is, how you can qualify for such a loan and what are the potential risks associated with it. 

What Is A 100% Bridging Loan?  

A 100% bridging loan is a debt from a lender that covers the 100% value of your security property or the asset you are using as security against the loan. It means you do not have to put down a deposit. This type of debt is uncommon because usually, bridging loans come with a maximum of 75% LTV of the gross debt, and you need to pay a deposit of 25% to 30% of your property value.

Therefore, it makes 100% bridging finance a greater risk and is offered by only a small number of lenders under certain circumstances. 

It is regulated and unregulated bridging finance, and you should know which one will offer you higher LTV. Whether you can take a regulated or unregulated debt depends on the purpose for which you are borrowing. However, unregulated bridging finance is more flexible and can be tailored according to your needs. 

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Types of Bridging loan:

There are different types of bridging finance:

How Can You Get A 100% Bridging Loan?     

Some lenders offer 100% bridging finance under specific conditions. The key to getting such a loan is to use extra security against the debt. If you do not meet this criterion, lenders are unlikely to offer a 100% bridging loan. 

The extra security that you can use can be a property you own and have equity in it or any other valuable asset. You can also use multiple properties at the same time as a security against the loan. 

Another way to get a 100% bridging debt is to take out a loan based on valuation instead of the purchase amount. There are lenders who are willing to offer you funds depending on the market value of your property. The market value is the best price that you expect to get for your property when it is open to market for sale.

The expected sale value is never an exact scenario, but usually, it is higher than the purchase value. So, in this case, the amount you can borrow may increase. You should always talk to a bridge loan advisor if you find it challenging to make a decision.                    

Risks Associated With 100% Bridging Finance   

You must take into consideration some risks into account before applying for a 100% bridging fund.

Additional Fees

When you use the additional property as security against the loan, you have to pay extra fees because each property requires a valuation. Moreover, for additional security, there are additional legal fees. Some bridging lenders also offer desktop valuation in which you do not have to pay a high valuation fee. You should talk to a financial advisor so that you can find the best deal and the right financial product.    

Repossession   

You should take a 100% bridging loan only when you can afford to repay the loan. The most significant risk is the risk of repossession. If you can not repay the borrowed amount on time, the lender has a right to sell your property and get the money back. 

Final Words

If you want to take out bridging finance, you must meet the eligibility criteria: a strong exit strategy, clean credit, experience in property, and valuable security property. If you meet the criteria, you can easily find the best deal and secure a loan at the best affordable rates. When you decide to take bridging finance, the first thing to do is shop around and make price comparisons so that you can find the best bridging loan providers in the UK.

There are dozens of bridging lenders in the UK, but only a few provide 100 bridging finance. When you search around and have additional security to use against loans, it is easier for you to get a 100% bridging loan and fulfil your current financial needs.

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