Bridging loan
What is a bridging loan?
A bridging loan is short-term finance borrowing secured on property. It "bridges" a gap: you need money now, and you have a clear plan to repay it soon, usually within 3 to 12 months, from a sale or from a longer-term loan. Because the property is the security, lenders focus mainly on its value and on how you will repay, rather than on monthly affordability in the way a traditional mortgage lender would.
Get in touch.
Complete the contact form, call us or email us to discuss your circumstances and requirements. A member of our team will contact you.
What bridging loans are used for
Auction purchases
Buying at auction when an auction bridging loan is required. Completion is usually due within weeks.
Chain breaks
When you need to buy before your own sale completes.
Properties awaiting work
Buying a property a mortgage lender will not yet lend on, for example one needing major work.
Property development / refurbishment
Bridging loans can be used for property development or refurbishment before selling or refinancing.
Time-limited opportunities
Releasing cash against property for a time-limited opportunity.
How it works with TIC Finance
Upon receiving an enquiry, TIC Finance will assess it for suitability and whether it is something we can provide ourselves.
Tell us about your requirements
What you are buying or releasing, the value of the property, and how you intend to repay.
We assess your enquiry
We look at whether the loan is suitable and whether it is something TIC Finance can provide.
Decision in principle (DIP)
If it is, we provide a decision in principle and tell you what the offer is subject to, for example valuation and due diligence.
Funds are released
When the legal work is complete and the documents are signed, the loan completes.
Funds can be released in as little as 48 hoursSubject to the property and the complexity of the case.
If we cannot provide the loan directly
If TIC Finance is not able to provide a loan directly, we will respond back to you informing you of this.
We will ask for your permission to approach our network on your behalf.
Associates, lenders and organisations across the UK who may be able to provide suitable options.
If applicable, we will support and help you throughout the process, should you need it.
What does a bridging loan cost?
Bridging is more expensive than a traditional mortgage from a high street lender, because it is short-term and faster. The main costs are:
Interest
Charged monthly. It can be paid monthly, or added to the loan and paid when you repay.
An arrangement fee
Usually a percentage of the loan.
Valuation and legal fees
Including the lender's legal costs.
Exit or broker fees
Charged on some loans.
Rates and fees vary with the lender, the property, the loan-to-value and your exit.
Your exit strategy matters most
Every lender will ask how you will repay. The two common routes are:
Selling the property
The sale proceeds repay the loan.
Refinancing
A longer-term loan replaces the bridge.
A weak exit is the biggest risk with bridging: if it fails, you may face extra interest, or the lender may enforce its security.
Is a bridging loan right for you?
Bridging suits people with a clear, near-term way to repay and a property to secure the loan. It is not suitable as a long-term solution.
Whether it is right for you depends on your circumstances. You should be well informed about the options available to you, what the bridging loan costs are and what the consequences may be. We recommend that you seek independent legal and financial advice to know whether it is right for your circumstances.
To find out more about our bridging loan rates and costs, please contact a member of our team.
Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.
Bridging loans secured on a home you live in are regulated and will be arranged accordingly. Business and investment bridging loans are not regulated by the FCA.
FAQs
How fast can a bridging loan be arranged?
It depends on the lender, the property and how quickly valuation and legal work can be completed. Some cases complete in days, others take weeks. We will give you a realistic timetable at the start and tell you if your deadline is at risk.
A bridging loan with TIC Finance can be funded in as little as 48 hours. However, this depends on the circumstances, the title of the property and the complexity of the case.
Can I get a bridging loan with bad credit?
Often, yes. Bridging lenders focus mainly on the security and your exit, but they will look at your history. Be open with us about it, so we can approach the right lender.
Different lenders and organisations have different criteria and requirements, so it is about finding a suitable option for your requirements.
What is the maximum loan to value?
It varies by lender, security and whether the loan is regulated. Lenders typically lend a proportion of the property's value, and we will explain what is realistic for your case.
Different lenders and organisations have different criteria and requirements. These can vary depending on the area and location of the property, the type of property and other factors.
What is the difference between open and closed bridging?
A closed bridge has a fixed repayment date, for example when contracts have been exchanged on a sale. An open bridge has no fixed date. Closed bridges are generally easier to place and can be cheaper.
Do I have to make monthly payments?
Not necessarily. It depends on the agreement between you and the lender. There are different ways interest can be repaid on a bridging loan, for example:
Serviced interest: you pay the interest monthly while the loan is running.
Retained interest: the lender deducts the interest for an agreed period from the loan at the start, so you receive a lower net amount.
Rolled-up interest: the interest is added to the loan and paid at the end, when you repay, which increases the total cost.
A combination: some lenders offer a mix, for example part of the interest paid monthly and the rest rolled up.
The loan itself is usually repaid in full at the end of the term, from your exit. Options vary between lenders, so we will explain what is available for your case.
What happens if I can't repay on time?
You may be charged extra interest and fees, which could include default interest rates and legal fees.
If the loan is still not repaid, the lender or organisation may begin legal possession proceedings to obtain possession of the property, and then repossess it.
If your exit is delayed, speak to the lender as early as possible.