Bridging the gap to your property goals, with our Kent based mortgage advisors

Bridging loans and how we can help

At Dahleys we can help you with all aspects of obtaining a bridging loan, we will ensure you clearly understand the risks, the costs involved, and ensure you have a viable exit strategy. We work with many bridging finance companies to ensure we get the best solution for you and your project.

Remember that like any financial arrangement, bridging loans have pros and cons, and it’s essential to weigh them up carefully with an advisor before making a decision.

What is a bridging loan?

A bridging loan, also known as bridge finance, is a short-term financing option that helps bridge the gap. It’s designed to provide quick access to funds for a temporary period until a more permanent and long-term financing solution is secured or the property is sold.

What can I use a bridging loan for?

There are many reasons to take out a bridging loan, including:

Buying at auction

Bridging loans are usually processed quickly, allowing buyers to access funds typically within 28 days, which is crucial in auction scenarios.

Refurbishment

Bridging finance is an ideal solution for property refurbishment, especially when you need short-term finance to cover the costs of the renovation, before refinance or sale.

Quick purchase

For a quick property purchase a bridging loan can be a perfect solution if you have a well-thought-out plan, a solid exit strategy, and you understand the potential risks involved.

To keep the chain going

A great way to bridge the gap between the purchase of a new property and the sale of an existing one. Commonly used by individuals and businesses to keep the property chain running smoothly.

Types of bridging loans?

Residential

This type of bridging loan is used by individuals to purchase or refinance residential properties and is regulated by the FCA. It can help buyers secure a new home before selling their existing property or cover the gap between property transactions. This type is regulated by the FCA. 

Development

These loans are tailored for property developers and are used to finance the acquisition of land or property and the construction or development of projects. Once the development is completed, the borrower may refinance with a long term mortgage or sell the property to repay the loan.

Commercial

Commercial bridging loans can used for commercial property transactions, such as purchasing office buildings, retail spaces, or industrial properties. They can also be utilised for business purposes like refurbishment projects or change of use.

Regulated

A regulated bridging loan is provided to individuals for personal or residential purposes and is regulated by the Financial Conduct Authority (FCA). It is typically used for purchasing a new home before selling the existing one, and the borrower must live in the property or have definite plans to do so.

Unregulated

An unregulated bridging loan is not covered by FCA regulations and is usually used for commercial purposes or by property investors, with more flexibility attached.

How much can I borrow on bridging loan?

Lenders offering bridging loans will assess the value of the property the loan is secured against, to determine the loan amount they are willing to offer. The loan amount is often based on a percentage of the property’s value (LTV). The amount you can borrow for a development bridging loan depends on several factors, including the lender’s criteria, the project’s specifics, and your previous experience. 

Is a bridging loan expensive?

Bridging loans typically come with higher interest rates compared to standard mortgages. This is because they are considered riskier due to the shorter repayment period and lack of long-term financial stability for the lender. Interest is payable on a monthly basis, it can be serviced or rolled up and paid on exit, arrangement fees are typically a percentage of the loan amount.

get in touch

Connect with our expert bridging advisors, contact Dahleys today