Finding Cheap Bridging Loans UK
Interest can change fairly quickly, and different lenders might offer different rates of interest. The important thing is to be able to compare them directly - so if you are comparing an APR with a monthly interest rate, you need to know the direct comparison to understand which is cheaper.
Revolution Brokers work with the whole of the UK lending market, with unrestricted access to products and rates. We negotiate as an advocate on behalf of our clients, to achieve terms not available on the open market.
Eligibility Criteria for Cheap Bridging Loans
There are lots of different criteria lenders will assess before they can make an offer. These include:
1. Exit strategy - the more robust your plan to repay the borrowing, the easier it is to secure financing.
The exit strategy is more important than any other factor, and you need to be able to demonstrate how you will repay the loan at the time you apply.
This could be through a mortgage, a remortgage, an asset sale or another form of capital - and different lenders have different restrictions on what exit strategies they consider suitable.
2. Credit rating - your credit rating shows potential lenders how creditworthy you are, and form part of their risk assessment.
If you have an adverse credit history, you may find that some lenders are not willing to lend to you. Others may lend but at higher interest rates and fees.
Don't rule out bridging finance if you have experienced credit problems in the past; give us a call, and we will work through all the options available to you.
3. Funding purpose - your lender will always want to know what you plan to do with the loan. If your plans involve a development, they will need to know how experienced you are in this sector, and have access to your business plans.
If your plans are clear, well researched, and provide a stable profit margin, your lender is likely to be more assured that the project is safe to invest in, and that you will be able to repay your borrowings on time.
4. Security - the security is the collateral a lender takes against your property or another asset, to ensure that if any unforeseen circumstances occur, they will be able to reclaim their debt.
If your property is in a prime location and highly sellable, this will provide robust security that a lender can be confident making an offer against.
5. Sector experience - while you can access a bridging loan as a new developer, some lenders will only accept applications if you have a minimum number of years of experience within the property sector.
This applies to larger bridging loans and commercial projects when an experienced developer is a safer lending proposition.
6. Deposit value - the higher the deposit you have available, the lower the LTV you are borrowing at and the more competitive the rates you are likely to be offered.
Most bridging loan property purchases require at least a 30-35% deposit, but if you have a deposit available of 40% or more, you will achieve the best rates on the market.
Bridging Loan Financing Rates for Limited Companies
By and large, the interest rates offered to companies are similar to any other type of borrower.
Lenders consider a commercial bridging loan application as the same type of financing as a company buy-to-let. They might ask for personal guarantees from the company owners and Directors as an added layer of security.
Special Purpose Vehicles (SPVs) are a type of limited company incorporated solely to manage the ownership and trading associated with investment properties.
Applications from an SPV company are likely to be more widely accepted, and attract more favourable terms.
Cheap Bridging Loan Rates UK in London
In most aspects of finance, London tends to be the most expensive location in the UK. However, when it comes to bridging finance, the rates tend to be very similar to elsewhere, so you wouldn't expect to pay significantly more.
Some lenders do carry minimum values that they will consider, against both the loan amount and the property value, in which case lower value property acquisitions are unlikely to be accepted.
There are also specialist lenders working on high-value bridging loans that concentrate their work in the capital, where properties are of a sufficient value to meet their minimum thresholds.