Frequetly Asked Questions

A bridging loan is a short-term loan (usually up to 12 months) that can be secured against a property and is designed to ‘bridge the gap’ until longer-term finance can be arranged, or an underlying security is realised.

An Unregulated Bridging Loan refers to a type of bridging loan utilised for purchasing a property that won't serve as the borrower's or their family's primary residence.

For instance:

• A bridging loan acquired to purchase a property meant for renovation and resale for profit.
• Alternatively, a bridging loan intended for a buy-to-let property (bridge to let) or a House in Multiple Occupation (HMO) that will be leased out and subsequently refinanced with a standard Buy-to-Let (BTL) mortgage.

Conversely, Regulated Bridging Loans are utilised for purchasing residential properties where the borrower or their family member(s) plan to reside.

For example:

• Purchasing a new home before selling their current residence.
• Acquiring a property at an auction using an auction bridging loan (due to the 28-day window for completion, necessitating faster financing compared to a traditional mortgage) for later refinancing with a standard mortgage.

There are no fee’s for investors. Generally, the following fees are applicable for the borrower: 

Valuation fee: This covers the surveyor's expenses for assessing your property's value.

Arrangement fee: It involves the setup cost of the loan, usually around 2% of the loan amount. 

Solicitors fee: usually charged at a set rate which pays our legal fees for completing the loan

Typically, there are no exit charges, or penalties for early repayment. However, please note that valuation and legal fees will be incurred. All other fees can be subtracted from the loan amount.

There are four available interest options:

1. Retained: All interest is paid upfront and deducted from the total loan amount.
2. Serviced: Monthly interest payments, contingent upon income and affordability checks.
3. Hybrid: A mix of retained and serviced; for instance, over a 12-month term, half of the interest might be retained, while the other half is paid monthly.
4. Rolled: Pay the entire interest at the loan's conclusion. Interest accumulates in the loan balance and is due upon redemption.

A First Legal Charge or first charge bridging loan enables a lender to secure the money they have lent to an individual or company primarily against the property used as collateral. This legal charge is synonymous with a secured loan, providing the lender with a primary claim over the property's value in case of default or non-repayment.