Bridging Finance

Bridge the Gap with Bridging Finance from WB Private Finance

Are you looking for short-term finance to bridge the gap between buying a new property and selling your current one? At Willow Brook Private Finance we specialise in bridging finance. Whether you are looking to move properties quickly, finance a property that needs renovating or developing or looking to buy a property not currently habitable, we can find the solution for you.

What is Bridging Finance?

Bridging finance is a short-term loan designed to "bridge" the gap between the purchase of a new property and the sale of an existing property. It provides borrowers with the flexibility and liquidity needed to secure their dream property without the delays associated with traditional mortgage financing.

Bridging finance is traditionally known as being used to purchase a property that needs renovating or when you want to move quickly or before your current property sells. There are actually a lot more scenarios where bridging finance is your best option and we can help you to utilise this short term finance to make the property viable.

Types of Bridging Finance

Closed Bridge

A closed bridge loan has a fixed repayment date, typically when the sale of your existing property is expected to complete. It's ideal for borrowers with a clear exit strategy and a defined timeline for repayment.

Open Bridge

An open bridge loan has no fixed repayment date, providing flexibility for borrowers who may encounter delays in selling their property. It allows you to access funds quickly while you finalise the sale of your existing property.

Development Finance

If you're a property developer or investor, our development finance solutions offer short-term funding for property development projects, including ground-up construction, refurbishments, and conversions.

Why Choose Bridging Finance with WB Private Finance?

Speed

There are lenders available that will do automatic valuations and offer 24/48 hour turnaround. Perfect for that auction property, chain break or to save a property being repossessed.

Flexibility

Whether you're buying a residential property, investing in commercial buildings, buying a property to refurbishing or changing the use of a property; bridging finance offers flexible financing options to suit your needs and objectives.

Tailored Solutions

At WB Private Finance, we understand that every borrower's situation is different. That's why we offer bespoke bridging finance solutions tailored to your specific requirements, whether you need short-term finance for a few weeks or several months.

Frequently Asked Questions

Is bridging finance a good idea?
Bridging finance is a short term finance solution. It is suitable in a lot of scenarios for a smooth transaction and to achieve the property purchase. As with all finance from personal loans to mortgages, there is finance that is more suitable for different people and scenarios. At Willow Brook, we look at all of your options to advise you of the best option. Your adviser will discuss all of the details with you to ensure it is the most suitable finance option for you.
How much deposit do you need for a bridging loan?

You will require 25% deposit with most lenders for a bridging loan. There are some lenders who will allow 20% deposit but this will limit your lenders available and so everything else will need to meet their criteria.

There are some lenders available who will also look at the gross development value which is the value of the property once the work has been carried out. For example if you purchase a property for £500,000 and plan to fully renovate the property and it will then be worth £1mil, they can consider lending against the £1mil value for the funds to carry out the work on the property.

How long does it take to put a bridging loan in place?

Bridging loans are designed to be a quick short term finance solutions. The timeframe will vary on whether there are any other charges on the property, the valuation and the complexity of the circumstances.

There are bridging loans available that can be agreed in 24-48 hours if a automatic valuation can be carried out and the terms are simple.

What is the monthly interest rate on a bridging loan?

The interest rate quotes for bridging loans is a monthly amount, due to them usually being used more short term. Interest rates start from 0.555 Per month (correct as of august 2024). A lot of lenders will allow you to roll the monthly payments in to the bridging loan if you cannot or do not want to pay these monthly.

Do you need collateral for a bridging loan?
A bridging loan is usually secured against a property so this would provide the collateral combined with your deposit. Alternatively you can secure bridging finance against another property you own but if there is already finance/a mortgage on the property this would be a second charge bridge. If you are securing it against a property you already own, you will be able to use the equity you have in the property as the deposit/ 25%.
What are the exit fees on a bridge loan?
Due to bridging finance being short term finance, there are lenders who won’t charge exit fees. It is common for there to be a minimum timeframe of 3 months for the bridge to be in place.
Do you need a guarantor for a bridging loan?
Bridging loans don’t require a guarantor. They are secured against the value of the property so if you fall into arrears on the payments, as with a standard mortgage the property can be repossessed by the lender.
Do bridging loans do credit checks?
Yes, bridging loan lenders will usually carry out a credit check when looking to lend money. They are generally more lenient on their criteria around credit with some bridging loan lenders specialising in poor or adverse credit history.
Is a bridging loan more expensive than a mortgage?
This is a difficult question as it depends on a lot of factors. If you plan to keep a property short term, the exit fees are a lot lower on bridging finance than on a mortgage. While the initial fees are higher to set up a bridging loan compared to a standard mortgage. The interest rates are generally higher if you look at them across a whole year as well as they are charged at a monthly rate. Bridging loans are often used when a standard mortgage isn’t available or suitable.
What is the minimum term for a bridging loan?
The minimum term is usually 3 months for there to be no exit fee with the lender. You can repay some bridging loans quicker but there could be a cost associated with this.
Do you pay bridging loans back monthly?
With most lenders you can chose to either pay the bridging loan back monthly or to have the monthly payments incorporated in to your loan.
Is it hard to get a bridging loan?
The short answer here would be No. For a bridging loan the easiest way to explain whether you would be viable for a bridging loan would be that everything needs to make sense to a lender. For example if you are purchasing a property for £300,000 at auction that isn’t habitable, it’s going to take £50,000 to make the property habitable and it will then be worth £360,000 a lender would be likely to say that this isn’t a viable project. Comparable if you where purchasing a property for £300,000 and using £50,000 to make it habitable and it would then be worth £500,000, this should be simple to obtain a bridging loan on. Essentially the lender is going to want to understand your plan at the end of the bridging loan to be able to repay it.
What exit strategies can you use for bridging finance?
Common exit strategies are sale of the property and remortgaging to a standard residential, buy to let or commercial mortgage.
What is bridging on a house?
Bridging on a house is where you take out bridging finance to purchase a house. This is commonly done when you want to move properties before selling your current property, for a property that you cannot get a mortgage on such as unabitable and for when you are looking to purchase a property to renovate and then sell.
What costs are involved with bridging finance?
Your will have a fee to your broker for arranging and setting up the bridging finance, a set up fee/arrangement fee from the bridging finance lender, a valuation fee if applicable for the lender and the legal costs. When we look at bridging finance for you, we will work out the best option for you overall based on how long you plan to have the bridging finance in place. We will discuss all of the fees with you as a lot of them can be added in to the finance but you will want to understand the breakdown of all of the numbers in detail.
Can you secure a bridging loan against a property you are buying?
Yes, bridging finance is commonly secured against the property you are purchasing. You can also look to secure it against a property you already own, but if there is already a mortgage or finance on this property, you would be looking at a second charge bridge which are usually higher interest rates.
Does a bridging loan make you a cash buyer?
There is often confusion around this are as you will have finance in place with a bridging loan so you would not be a cash buyer. The difference here is that a bridging loan is usually available on properties advertised as cash buyer only and things like auction or quick sale properties. Cash buyer only on a property advert usually refers to the seller or estate agent believing that a mortgage is not possible due it factors such as it being unhabitable, the lease years left, the current tenancy or condition of the building.
How do you get out of a bridging loan?
This is usually referred to as your exit strategy. The most common exit strategies are sale of the property or remortgaging the property to a standard mortgage. This can essentially be anything that the lender can see will be viable by the end of the bridging term which can be up to 3 years. It could be a pension lump sum, inheritance, sale of another asset or investment.

Unlock Your Property Potential with Bridging Finance

Ready to bridge the gap and secure your next property investment?

Contact WB Private Finance today to speak with one of our bridging finance specialists and explore your options. Let us help you navigate the world of short-term financing and achieve your property goals with confidence.

CONTACT US

back to top