Bridging Loans Bristol
Bristol is a city unlike any other. The picturesque city sits by the River Avon and offers a variety of different things to see and do.
Between zoos, museums, performance centres, and more – you’ll always have something to do.
If you want to own property in Bristol then you should consider a bridging loan.
What are bridging loans?
Bridging loans are a form of financial product where you receive a temporary cash-flow solution to bridge a financial gap before getting permanent finance, such as with a mortgage or property sale.
It’s easy to get a bridging loan in Bristol. These loans are highly versatile and have different criteria from what you see with a standard high street bank or mortgage lender.
Much like a mortgage, these loans are secured against property.
How do bridging loans work?
Borrowers use bridging loans to solve temporary cash-flow problems. One example would be if someone wants to buy a new property but has to sell their existing property to cover the costs.
In such a case, a bridging loan could offer the short-term funding needed. The loan could be secured against both the existing property and the new property.
Securing the loan against two securities keeps the borrowing costs down because it means you can get a better interest rate.
One of the few requirements to getting a bridging loan is having a secure exit plan.
Lenders assess that you can repay the loan before they give you the money. More often than not, the money comes from a property sale.
For example, borrowers could pay the loan using the money they get from selling their house. You can also pay the loan back with a mortgage.
How much you can borrow depends on your circumstances. In general, you can borrow anywhere between £25,000 and £25m.
How much does a bridging loan cost?
Short-term lending like this always costs more than long-term finance such as a mortgage.
You should always see bridging loans as the means to an end and a short-term solution and not rely on these loans for anything else.
In terms of costs and fees, there is a lender arrangement fee of roughly 2% of the total loan value. The fee is added to the total loan amount and paid back at the end of the term.
Bridging loans generate monthly interest and how much you pay depends on the loan to value (VLT) although other factors, such as property type and location, can affect interest rates on non-regulated bridging loans.
Non-regulated loans also sometimes have an exit fee of between 1% and 2%. While bridging loans do generate monthly interest, the money is added to the total amount paid back at the end of the loan term.
The good news is you don’t need to make monthly interest payments. Given that bridging finance is secured against something, you’ll have to pay administration fees.
Lenders have to get solicitors involved to ensure that all legal conveyancing is handled properly.
The legal costs for a bridging loan are similar to those for a standard mortgage. You’ll also have to pay valuation fees for valuations from independent surveyors.
Some bridging loans only charge interest for as long as you have the loan.
For example, if you take out a 12-month loan and manage to pay it back in 6 months because you sold your property, you only pay 6 months of interest.
Others will require you to pay the full amount or may prevent you from paying the loan early. Be sure to discuss this with the lender before signing anything.
Talk to the experts today
Bridging finance isn’t the best solution for everyone. Bridging loans are best for people who need a short-term financial solution while they work on permanent finance.
If you think that you would benefit from a bridging loan, then please don’t hesitate to contact us. Our directory can help you find the best lender for a bridging loan.
It’s best to get help and advice from professionals. Our friendly team is waiting to hear from you.
We always recommend trying a few different providers to get the best possible deal on your bridging loan in Bristol. If you would like help with calculating fees, then use our bridging loan calculator.