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Applying For a UK Bridging Loan

What can you expect when you apply for a bridging loan for the first time? Our guide will ensure you’re prepared for every lender question and understand how the assessment process works.

Almas Uddin
Almas Uddin

Founder and Mortgage Advisor

Almas Uddin2024-06-14
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Why you should apply for a UK bridging loan

Loan applications can often feel stressful and long-winded, so knowing what information you need, and what documentation is required can streamline the whole process!

Here we'll run through what is involved in applying for a bridging loan.

For help with your bridge finance application, or to source a competitive deal, give us a call on 0330 304 3040 or drop a message to the business finance broker team at [email protected].

How Does a Bridge Loan Work?

Bridge loans are usually easier and faster to apply for than most other forms of loans since they are short-term and interest-only. Lenders won't be as interested in your income as in your exit strategy to repay the original balance.

  • Property Details
  • Type of loan
  • help Maximum 75% LTV
  • help Maximum 70% LTV
  • help Maximum 70% LTV
  • help Maximum 65% LTV
  • help We will lend against current market value of the asset with vacant possession

  • £7,500,000
    help You cannot exceed the maximum loan available based on the maximum LTV for the corresponding type of property selected above
  • 75%
    help You cannot exceed the maximum LTV available for the corresponding type of property selected above

  • 0
  • help Term should be entered in whole months, to a maximum of 12

  • help Deducted interest is where the forecast interest amount is deducted from the loan on day one.
  • help Serviced interest is where the interest is paid on a monthly basis. If serviced interest is chosen, evidence will be required to show your ability to pay interest when it is due.
  • help This is the standard rate for the property type chosen
  • help You can enter a custom rate below our standard rate for the calculation, but the availability of this rate is not guaranteed
Instant Results
Total security value 0
Gross loan amount 0
Gross LTV 0
Interest rate 0
Term (months) 0
Minimum term (months) 0
Assumed arrangement fee @ 2% (min £2,000) 0
Interest Retained 0
Monthly Serviced Interest 0
Admin fee 0
Indicative day 1 Net loan advance 0
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What is a Bridging Loan UK - How Do I Apply?

  1. First, you contact an independent broker who will assess your borrowing needs, discuss your circumstances, and recommend the best lender to apply to.
  2. We work through your exit strategy, confirm whether your application is viable, and advise what documents you're going to need to get approved.
  3. The next stage is comparing the current deals available, and approaching the best lender for an agreement in principle - or go for a complete application straight away if you have limited time.
  4. Lenders will go through the application, risk-assess it through their underwriter, and then make a conditional offer set out what information they need, and conditions such as having the property valued above a particular amount.
  5. The application then passes over to solicitors for the legal paperwork to be completed.
  6. Once everything has been returned, and the conditions met, the funding is released, usually through your solicitor.

What Paperwork Do I Need to Get the Best Bridging Loan Interest Rates UK?

There are a few key things you'll need to get started:

  • Valuation - the lender will need to know what the property is worth. Most lenders will organise this themselves through their appointed surveyor.
  • Proof of your ID, address, and exit strategy explaining how you will pay back the original loan - e.g. mortgaging the debt, in which case you will need an agreement in principle.
  • Business plan and evidence of how much experience you have in this type of development, mainly if it is a commercial venture.
  • Proof of your income, although not always required if you have a robust exit strategy.

What is the Best Way to Apply for a Bridging Loan?

Many lenders offer online applications. Still, it's always wise to consult an independent broker before going ahead, as there may be more cost-effective options available to you.

We recommend using a whole-of-market broker to recommend any financing product from any lender that we think best suits your bridging loan requirements.

What Time Scale Applies to a Bridging Loan Application?

One of the critical benefits of bridging loans is that they are so quick to organise. You can have funding in place within a few days, depending on the valuation.

How Does a Bridge Loan Work Outside of England?

There can be changes to available lenders in different UK regions.

If you're in, say, Scotland, there may be fewer lenders to choose from. Some areas also have regions where developments are strictly controlled, where it might be harder to come across bridge loans.

What Is a Bridging Loan UK Typical Eligibility Criteria?

Lenders will always look at a few critical factors to decide whether they can offer to lend, these include:

  • Exit strategy - how you will repay the debt.
  • The purpose of the bridging loan.
  • How much deposit you have available.
  • Where you are based.
  • Your credit history.
  • How experienced you are in property developments.

What is a Bridging Loan Example Exit Strategy?

Your exit strategy is crucial and an essential aspect of a bridging loan application.

This type of borrowing is interest-only, so you need a secure way of repaying the original balance at the end of the term.

Most borrowers plan to remortgage or sell the property at a profit as their exit strategy. Therefore, things like valuation reports and an analysis of your type of project's property market will be required.

Remortgage exit strategies usually require an agreement in principle from a mortgage lender.

Some lenders also have policies about what sort of exit strategies they will accept. Non-standard method include using investments or an inheritance to repay the balance, and there can be more strict criteria if you plan to use this type of asset or income.

How Does my Planned Development Property Impact my Bridging Loan Application?

The lender will need to know details about what property you are financing with the bridge loan, to assess whether it is likely worth enough to repay the debt.

You might find that some lenders specialise in specific types of property, and some will only lend against commercial undertakings, such as developing a hotel, if there is a viable business plan.

Other complex properties to get a bridge loan against include petrol stations and restaurants, since this type of project is perceived as a higher risk.

How Do Bridging Loan Rates UK Apply to Uninhabitable Properties?

You can potentially take out a bridging loan on an uninhabitable property to finance the development, where a typical mortgage wouldn't be possible.

It's often an option where a property is purchased as an investment and needs substantial refurbishment before it would be suitable to live in.

Some lenders will not lend against this type of property, so it's vital to work with a broker who can recommend which bridging loan provider is comfortable with developments concerning uninhabited properties.

How Does a Bridging Loan Work UK With Bad Credit?

Bad credit is always a stumbling block when you need to take out borrowing, but isn't as crucial for a bridging loan as for a mortgage.

If you have mild bad credit issues, but a robust exit strategy, you will probably be able to find a bridge loan without significant problems.

Revolution Brokers works with lenders who offer bridge loans against a variety of circumstances, including:

  • Having no credit history, or a low credit score.
  • Record of late payments or missed mortgage payments.
  • Defaults or CCJs.
  • IVAs or DMPs.
  • Repossession or even bankruptcy.

A lot depends on when the issues occurred, what values were involved, and whether you have since repaid the debt.

How Much Property Development Experience do I Need to Get a Bridging Loan?

The more experience you have, the easier it is to be approved since experience mitigates the lender's risk.

Some lenders might require a specific amount of experience, whereas others are happy to lend to first time developers provided the exit strategy is viable.

What is a Bridging Loan Example Deposit Requirement?

Generally, lenders will offer up to 70% or 75% of the investment value. There are additional interest costs to budget for, so you will usually need a deposit of around 30% to 35% to secure a bridging loan deal.

If the property is higher risk, you might have the Loan to Value capped at 60% or even 50%, in which case you will need a 40-50% deposit to proceed.

Are Bridging Loans UK Available for Rental Property Investments?

They certainly are, and it is common for a landlord to use bridging finance to purchase an investment property through a bridge to let loan.

What Are the Average Bridging Loan Rates UK For a Commercial Business?

You can take out a bridge loan as a limited company, and pay similar rates to a private borrower.

Most of the time, the deals are similar to a buy to let commercial mortgage, and the lender may ask for a personal guarantee from the directors before releasing the lending.

Expert Advice with Bridging Loans UK

The best way to find a competitive bridging loan is through an experienced, independent broker such as the Revolution team.

We search the market to find the most competitive rates and negotiate deal tailored to your borrowing requirements.

Get in touch at 0330 304 3040, or email us at [email protected] to get started with a new application!

Almas Uddin
Almas Uddin

Founder and Mortgage Advisor

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FCA disclaimer

The content included in our articles, blogs, web pages and news publications is based on information accurate at the time of writing. Note that policies and criteria can change regularly throughout the UK mortgage lending market, and it remains essential to contact the consultation team to receive up to date guidance. The information included on the Revolution Brokers site is not bespoke to any circumstances or individual application scenarios and therefore is not intended to be used as financial advice. The content we share is designed to be informative and helpful but cannot be relied upon to provide individual advice relevant to your mortgage requirements. All Revolution team members are fully qualified, trained and experienced to provide mortgage advice of an independent nature.

We collaborate with lenders and providers who are regulated, authorised and registered with the Financial Conduct Authority (FCA). Should you require specific mortgage borrowing types, some products such as buy to let mortgages may not be FCA regulated. The Revolution team can provide further information about regulated and unregulated lending as required. Please remember that a mortgage is a debt which is secured against your home or property. Your home can be at risk of repossession if you do not keep up with the repayments or encounter any other difficulties in managing your mortgage borrowing responsibly. This also applies to any remortgage or home loan secured against your property, including equity release products.

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