Mortgage Bridge Loan
Bridging the gaps in your property funding
Property is expensive to buy and sometimes you need to move fast to secure a deal. As a result, finding large-scale, short term funding can vital.
Being able to access large-scale funding fast can be vital to secure a property in a competitive market. A mortgage can provide long-term funding solutions, and specialist solutions exist for commercial property, buy to let and residential property. However, because of the needs for lengthy searches and valuations mortgages can take weeks or even months to arrange.
There are many situations where a property deal must be completed quickly, and waiting for a mortgage to be arranged is impossible.
Specialised short-term Mortgage Bridging Loans are designed to provide the solution. Like a mortgage, they are secured on property, meaning that if you don’t make repayments, your property could be seized and sold. However, unlike conventional mortgages, they can be arranged in a matter of days, helping secure
They recognise the need to move quickly, and offer rapid access to funds - although they tend to be relatively expensive, and only used until another finance product designed for the long-term, such as a mortgage, can be arranged.
Mortgage Bridging Loans are so-called because they are designed to bridge a short-term funding gap. Loan amounts start at around £25,000, and there is no maximum - but their main benefit is their speed: Bridging Loans can be arranged within a matter of hours, and funds released in as little as 72 hours, under certain conditions.
Large amounts are involved, and lenders offering Bridging Finance will carry out detailed checks and apply conservative lending criteria, but are able to make rapid decisions because they can work without the bureaucracy that slows down many traditional lenders.
When might you use a Mortgage Bridging Loan?
A Mortgage Bridge could be used whenever there is a short-term need for large-scale property funding. This might be when one property is being sold to finance the purchase of another, and when there is a delay in the sale of the first property, leaving a funding gap.
It can also be used where a deal must be arranged quickly, or when a property has been bought at auction, and funds must be provided at short notice.
What does short-term property funding cost?
Short-term finance is always more expensive than long-term lending. However, although the fees and interest rates for a Mortgage Bridging Loan can be relatively high because loans are for the short-term, the overall cost may have little actual impact on the long-term costs of a major purchase.
Interest rates charged will vary, depending on your circumstances and your business, and the deal to be funded. Current rates can range from 0.7-1.5% per month, with even higher rates for more difficult propositions.
In addition, there may be a number of fees, including an arrangement fee which can be 2% of the loan amount, an exit fee which can equal one month’s interest, and surveyors’ and legal fees. If the loan runs over the agreed term there will also be substantial penalty fees.
Repayment arrangements can vary. In some cases, all fees and interest can be rolled up into the loan, which can be settled with a single repayment.
In most cases, a Mortgage Bridging Loan is used as an interim solution for a property purchase and be paid off by a solution designed for the long-term, such as a Commercial Mortgage.
Why you need Rangewell to find the short-term property funding arrangements that are right for you
Most property loans involve large-scale funding, and getting the right deal can make a difference of tens of thousands of pounds.
Even a fraction of a percentage point can make a substantial difference to what you actually pay, while fees and penalties can complicate the position still further. There are many different lenders who may be prepared to offer funding. Each has their own approach to interest rates and fee arrangements, and comparing offers needs an expert eye.
At Rangewell, we know the lenders who can offer short-term property funding, and we can use our expertise to identify the deal that really is the most appropriate for you. Our knowledge can not only help you secure the funding you need - it can save you a great deal of cash.
We can help you find short-term funding quickly, and then work to find the most competitive source of long-term funding to replace them and reduce your costs.
Finding out more about short-term property funding
If you want to look at short-term funding for your property needs, contact us at Rangewell. Our experts can work with you to understand the solution that is right for you, and use our network of contacts to find the lender with the most competitive provider.
ANY PROPERTY USED AS SECURITY, WHICH MAY INCLUDE YOUR HOME, MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
REAL EXAMPLES OF WHAT WE CAN DO
Find a mortgage bridge of over £1 million to secure a property bought at auction
Source funding to allow an company to buy a development plot on the day it became available
Found a lender to advance finance to buy a factory in 3 working days
Find funding to allow a developer to buy a row of houses from a local authority
Helped an industrial estate owner secure funds to buy an adjacent property at auction, ensuring scope for growth
Meet real businesses who have used Property Development Finance
Helping you build your profits
Fast decisions from specialist lendersLenders will look at your credit profile, the value of the asset, and your exit strategy to make a decision in the shortest possible time.
Suitable for all types of property• Residential, commercial and mixed-use development • Conversion and refurbishment • Planning gain transactions • Part built development refinance
For property professionalsProfessional developers, investors and landlords can all use bridging finance as part of their overall funding strategy.
Download Rangewell’s free and detailed guide to Property Development Finance
How does property development finance work?
Which type of funding do you need for your project?
What are the costs?
What are the restrictions?
The downsides of Property Development Finance
Making the application
Key terms to check
Experience is essentialYou need to demonstrate experience in undertaking developments of the type and size that are seeking funding for.
You must demonstrate profitabilityAs a minimum guide, projects should show at least 25% profit on costs before they can be considered for funding.
Staged drawdown of fundsYou will have to demonstrate progress on the project to access each stage of funding. This can cause problems if a project faces unexpected snags.
Our service is...
ImpartialTransparent and independent, treating all lenders equally, finding the best deals.
In-depthEvery type of finance for every type of business from the entire market - over 300 lenders.
In-personSpecialist Finance Experts support you every step of the way.
FreeWe make no charge of any kind when we help you find the loan you need.