A bridging loan is a secured loan, meaning that it is tied to an asset that the lender can claim if you default on your loan. Whilst this does put the asset at risk, it also reduces the risk to the lender, meaning that they are more likely to be able to offer larger sums at lower rates.
A bridging loan will always be secured against real property, also known as real estate or simply property. Under this definition, however, is an incredibly wide range of security that you can offer; commercial property, flats, houses and investment property are all accepted.
Unfortunately, we cannot accept first charge over your main residential home, or a property that you, or a close family member, occupy 40% or more of. This is because such a loan would be regulated by the Financial Conduct Authority (FCA), and we do not source regulated bridging loans.
The good news, though, is that first charge residential lending is about the only exception.
Building plots: Plots with or without planning permission are accepted. If planning permission has not been obtained, you will need to opt for a more risky open bridging loan; once permission is in place, you can use a self-build mortgage, further bridging finance or even your own funds to finance the building project.
Buy to let property: Mainstream buy to let lenders are unlikely to lend for short terms, and unless the rental income will cover the loan interest payments by a certain amount. Bridging lenders will lend as either case, and accept a rental property as collateral for the loan.
Commercial property: If you want to expand or relocate your business, purchase stock, deal with urgent cash flow problems or, indeed, accomplish any other legal purpose for which you need a large sum of money quickly, you can secure a bridging loan against your commercial premises to do so.
Dilapidated or uninhabitable property: Even if a property is so run-down that it would be considered unfit for human habitation (a common example is when basic sanitation facilities, such as a lavatory, are missing), it can be used as security for a bridging loan. Once you have completed the necessary works, you can refinance the property or sell it for a profit.
Land: Any land, including farm land, is accepted as loan security.
Multiple properties: The loan security needn’t be a single property; one bridging loan can be secured against multiple properties in order to raise the needed funds, and by doing so it may even be possible to increase the LTV of your loan to 100% or higher.
Second charge on residential property: Second charge loans are useful when repaying your original loan would leave you with early repayment charges or a higher interest rate. Second charge residential bridging loans are not regulated by the FCA, and therefore your lender will accept second charge on a residential property as security for your loan (be aware, though, that second charge bridging loans tend to be more expensive).
Semi-commercial property: Multi-use properties, such as flats above shops, are accepted, provided that at least 60% of the property is used for commercial purposes.
Unusual construction: Many traditional mortgage lenders won’t lend on properties with unusual (or ‘non-standard’) construction – that is to say, any property not build with run-of-the-mill concrete foundations, block or brick walls and a tiled, pitched roof. This can include high-rise flats, steel- or timber-framed properties, glass, metal, thatch, shingle and Cornish block. These types of property, and more besides, are all acceptable security for a bridging loan.
Contact us to find out more
As you can see, bridging loans are extraordinarily flexible. If you would like to find out more about what we can accept as bridging loan security, or apply for a loan, go ahead and get in touch on one of the numbers at the top of the page.