2nd May 2018 | By Ben Lloyd How Long is the Average Bridging Loan Term for? Closed vs. Open Bridging Loans – What’s the Difference? Whether it’s for meeting transaction deadlines or you require chain break finance, sometimes you may find yourself needing finance fast. In this case, bridging finance could help – but do you have everything you need to meet lenders’ loan eligibility criteria? Our Specialist Property Finance broker, Andrew Price (CeMap, DipFA), explains the typical bridge loan requirements here. Can I Get a Bridging Loan? Every lenders offer will be different when it comes to bridging finance, however there is a list of required information that generally satisfies the majority of bridging lenders in regards to the data they need to offer terms or issue an Agreement in Principle (AIP). This is as follows: Background Details Lenders will require a brief breakdown detailing what you are looking to use funding for. This should include the circumstances and the purpose of the loan. Personal Details As the applicant, a lender will require some basic personal details about yourself. This will include: • Full name • Date of birth • Nationality • Current address • Residential status – owner-occupier/tenant/living with friends or family • Income • Employment status and details • Borrowing entity – Ltd company/LLP/personal • Other owned properties Property Details (to be purchased or refinanced) A lender will also require information on any property you intend on purchasing or refinancing using the loan. This will include: • Security address • Type of property • Purchase price and property value • Tenure – Freehold/leasehold If you plan on purchasing a property to refurbish it, either to flip or maintain as an investment, you may also be asked to detail: • The proposed works or refurbishments to take place • The cost of works • The property value once works have been completed Documentation Required As well as providing the above information, you may also be asked to present the following documentation: • Proof of ID and address • An asset and liabilities statement • An AIP for the follow on mortgage (if refinancing) • A property portfolio schedule (if other property is owned and you are looking to cross collateralise across a few properties) • A detailed schedule of works – to include costings and timeframes, plans and planning permissions (if refurbishing the property) • Your bank statements from the last three months (if a high LTV and/or you’re looking to refinance as an exit strategy) Please note: A lender may request some additional information, but this is treated on a case by case basis. Loan Request Details Lastly, the lender will require details about the amount you want to borrow. Generally, lenders will go to a maximum LTV of 75% of the gross loan amount. This includes any retained interest for the term of the loan and any arrangement or broker fees. For example, on a property valued at £100,000 the maximum gross loan available will be £75,000. Therefore, the net loan amount (i.e. the amount the client will receive) will be £75,000 minus the retained interest and fees. The lender will also ask how long you would like the loan for. Bridge loan terms are available from between 1 month to 18 months, however regulated loans will be capped at a maximum of 12 months. The bridge does not have to be held for the full term and can be repaid earlier, usually without any early repayment charge or exit fee. Lastly, you will require an exit strategy. This is very important. A solid exit strategy can be the difference in obtaining a bridging loan or not. The exit is usually the sale of the property or refinancing on to a long term deal such as a commercial, residential or BTL mortgage. Adverse Credit At this point, it may also be beneficial to outline any adverse credit or concerns. The lender will learn this further down the line anyway, so it’s better to be upfront to avoid complications. If you’d like to learn more about bridging finance, check out our blog or get in touch to speak to one of our friendly brokers.