Usually an applicant will provide proof of funds, ID and Proof of Address, a plan of how they will exit the bridging loan and any evidence to back that up. Such as, for remortgages, the lender might want to evidence income document to make sure it will be sufficient for a remortgage exit. Or if the exit will be repayment of the loan via a property sale, the lender might want to evidence it is advertised and a valuation might be required to confirm the value of the property as well as a mortgage statement for any charges on the property.

Bridging loans allow you to buy properties that are inhabitable, for preplanning, restrictive covenant or title issues and also to individuals with bad credit. Bridging loans are short term, usually between 12-24 months and interest is charge monthly. The interest payments are either deducted from the completion balance or serviced (paid monthly).

To date we have arranged a non status bridging loan from start to finish in just 4 days.

Circumstances would be the key driver for a fast completion with a non status bridging loan, by this we mean strength of exit.

Sale – profitability of the deal and demand for sale, checked by the valuer.

Remortgage – underwriting will become more enhanced for this exit type, such as credit status, income, experience, stress testing and asset and liability review.

For a case to have speed of application it must have a clear exit, this is the first part.

The next part which can determine the time taken to arrange a non status bridging loan would be the legals. This is very important and if you are looking to complete on a bridging loan quickly, you will need your broker to take you to a lender that will not require searches.

If a lender does not require legal searches and they are happy to accept an indemnity policy, then it can really speed up the time it takes to arrange a bridging loan.

Legal searches might take 6 weeks with some councils, so if you are buying at auction with just 28 days to complete, it might not be suitable to use a lender that insists on searches.

Yes.

Most often your valuation will be panelled out to a local surveying team and usually your broker will have a choice of three valuers to choose for your bridging loan. This is great as it will allow you to access valuers that have that local understanding of your property, rather than nationwide firms appointing a representative from a distance away to value your property.

Yes.

Being asset based a lot of these lenders will of course look at the exit, if sale, then the underwrite will be heavily upon the valuation which will consist of confirming the property is either below market value, or there is enough equity in your main residence or other buy to lets to secure against. For below market value transactions, we work with lenders that may lend up to 85% of the open market value of a property, if that figure is over 100% of the purchase price then you might be able to get 100% funding without additional security.

Underwriting is enhanced for this interest repayment type. The borrower must have a reliable source of income or cash flow to cover these regular interest payments. This method is suitable for borrowers who have good disposable income or other financial resources.

Since the interest is being paid regularly, it does not accumulate or add to the principal amount of the loan. At the end of the loan term, the borrower only needs to repay the principal amount.

Servicing the interest can be more cost-effective in the long run, as it prevents interest from compounding and increasing the overall amount to be repaid.

Deducted Interest

Deducted interest is where the total interest for the entire loan term is calculated upfront and deducted from the loan amount at the outset.

When the loan is initially drawn, the lender deducts the total interest amount for the entire loan term from the principal. For example, if you take out a loan of £100,000 and the total interest for the loan term is £20,000, you would receive £80,000 upfront, but you would still owe £100,000

The borrower does not make regular interest payments during the loan term. This can be beneficial for those who do not have good disposable income or prefer not to manage monthly payments.

At the end of the bridging loan term, the borrower repays the principal amount of the loan with a refund of any months not used. Using the previous example, the borrower would repay the original £100,000 if they remained on the term for 12 months.

This method provides greater flexibility for borrowers who need to manage their cash flow carefully and might not have the means to make regular interest payments.

Non status bridging loans, often do not come with exit fees however, this feature does vary from lender to lender and occasionally you might see products with exit fees. These product sometimes compare in cost to those without exit fees so it is important, that you and your broker does a true cost comparison of all the options to make sure that your product is the most cost effective with or without an exit charge.

As bridging finance is a short term loan, they will be heavily underwriting your exit. Therefore, if you are a property investor buying properties to flip, then you will not need clean credit in order to exit and that means that the focus will be on the exit, which will be around the end value if there is a planned refurbishment. If you are remortgaging then your credit file will become more important to a bridging lender as this will impact your exit.

There are non status bridging loan products out there as high as 90% Loan to value (LTV), however, those can be a little bit more expensive. For the most competitive bridging loans, these are between 75%-85%LTV. By loan to value, we mean against the open market value and not the purchase price. It is possible to be geared at 75%LTV and still be getting over 100% of the purchase price.

Although some lenders will be more comfortable with experience, most bridging lenders would not require you to have any level of experience when arranging a bridging loan. The experience required at underwriting by the bridging lender, will be the experience you will need to get a development loan in order to exit the bridge or experience required to remortgage. This means that without experience you could develop property or land with funding from the bridging facility.

You can either take serviced interest or deducted interest from the initial facility, please see a break down of each of these below.

With non status bridging loans we usually see 180 day valuations or 90 day valuations, some might lend on market value but that is uncommon. 180 or 90 day valuations assume they are sold within those periods and can therefore reduce the figure returned.

Properties can be valued with many different methodologies. Whichever method is utilised, surveyors will typically comment on the ’90-day valuation’ in addition to the ‘180-day valuation’.

A ’90-day valuation’ is based on the assumption that the property will be sold within this 90-day timeframe, and the valuation of the property will be on this basis. Being such a restrictive period of time, this will be much less favourable.

Similarly, a ‘180-day valuation’ is also generated on the basis of the property being advertised and sold within 180 days.

This value for both 90- and 180-day valuations will reflect a much more conservative figure opposed to the market value, which is not subject to these factors.

Often where there is more than a 15% difference between the 90 day and 180 day valuation, non status bridging lenders will base their lending on the 90 day value.