When it comes to selecting a UK bridging finance lender, the decision-making process can be both crucial and complex. With a myriad of options available, it's essential to carefully consider the lender's reputation, terms, and overall suitability for your specific financial needs. Whether you're a property developer seeking short-term financing or an individual looking to secure a bridging loan, navigating the landscape of UK bridging finance lenders requires a thoughtful approach. In this guide, we'll explore the key factors to consider when selecting a UK bridging finance lender, empowering you to make an informed and advantageous decision for your financial endeavors.
How Can I Choose the Best Lender for a UK Bridge Loan?
Most lenders assess every bridge loan application on a case-by-case basis, so it isn't always obvious who offers the most competitive rates.
The best option is to appoint an experienced broker who can identify the right lenders, and take a view as to who is most likely to approve your loan against their eligibility criteria. Some of the best bridge loan deals are available only through brokers and are not available directly to the public.
Which UK Banks Offer Bridging Loans?
Lots of banks and financiers offer bridging loans, but the terms, rates and the bridging loan cost will vary.
- Greenfield Capital offers LTV caps of 70% for loans up to a year, with a minimum value of £25,000. The arrangement fees are steep at 2%.
- HSBC only offers bridge loans to existing customers in Hong Kong, without a comparable UK product.
- Lloyds Bank offers bridge loans for clients who wish to finance a new home purchase while waiting for their existing property to sell. Products include open and closed loans with fixed repayment dates. There are also self-build mortgage options for residential property build projects.
- Masthaven offers bridge loans up to 70% LTV on a first charge basis and up to 65% on a second charge. Terms are available from one month up to a year and a half.
- Oblix Capital provides bridge loans up to 75% LTV on first charges and up to 65% on second charges, with a maximum term of one year.
- Precise Mortgages offer bridge finance mortgages with minimum caps of £50,000 or over £25,000 for commercial bridge finance
- Shawbrook has a bridging loan finance product, with terms up to two years maximum, at a minimum value of £50,000, and capped at 75% LTV.
Are Specialist Bridging Finance Lenders UK Better Than a High Street Bank?
Unfortunately, many UK high street banks only offer this type of lending to existing clients with a high net worth, and it's often far more preferable to use a niche lender with a range of flexible bridge finance products than a mainstream bank.
Other banks will offer a bridging loan, but will not advertise these, or seek new clients in this lending sector, including:
- First Direct
- Halifax
- Nationwide
- NatWest
- Santander
One of the issues here is that banks typically have rigid applicant criteria, don't offer the most competitive rates, and aren't bridging finance experts.
While some may offer short-term bridge loans as a supplementary product to existing banking clients, they aren't as tailored as the diverse range of bridging finance options available through a whole-of-market broker.
The Difference Between Residential and Commercial Bridging Finance Lenders
Bridging loans are available for a broad range of purposes, and you could be applying as a standalone residential buyer, a buy-to-let investor, or as a commercial business.
The right lender will depend on your circumstances, as the assessment process is somewhat different between those different buying categories.
However, the difference between residential and commercial bridging finance isn't solely related to the nature of the applicant - it's about the purpose of the loan, and the type of property in question.
Residential Bridging Loan Lenders
A residential bridging loan is secured against a residential property, whilst a commercial bridging loan is secured against a commercial property.
Most lenders are ready to arrange bridging loans against residential properties, but borrowing for commercial or mixed-use assets, such as flats with shops below, are more difficult to come by.
The proportion of a property utilized for residential living determines whether it is appropriate for FCA-regulated residential bridge loan products, or unregulated - commercial bridge loans. For example, if the property is used as a dwelling for 40% of the time or more, it is normally classed and accepted as a regulated residential property.
This factor will determine the right lender to apply to, as some will offer a range of bridge loans, whereas others will be limited solely to residential or commercial bridging finance products.
Commercial Bridging Finance Lenders
Choosing amongst the many types of bridging loans accessible necessitates taking into account your needs and preferences, as well as your budget.
Residential bridging loans are often issued at lower rates of interest and with reduced overall borrowing expenses, though there are exceptions. The fact that the money can be utilized for nearly any lawful purpose is one of the most enticing characteristics of bridging finance in general.
There are no restrictions on how the funds can be utilized, regardless of whether you apply for a business or residential bridging loan.
The amount you can borrow is governed by the value of the property you're using to secure the loan and your overall financial situation.
How Can I Apply to Bridging Finance Lenders UK?
The first step is always to consult an experienced, independent broker. Many banks don't accept direct applications, and may immediately refuse an applicant if you do not meet their application criteria.
While a bridging loan can be fast, it is essential to apply to the right UK bridging lender who can offer to lend against the terms you need to get a bridging loan best suited to your needs.
Short-term bridge lending will always come with higher interest rates than a standard mortgage, so it's essential to ensure your application is handled by an independent broker who can signpost your borrowing requirements to the most suitable bridging loan lender.
Revolution Brokers can help you choose from a plethora of options such as regulated bridging loans, commercial bridging loans, a closed bridging loan with proper monthly interest payments that will suit you best as well as help you get open bridging loans and unregulated bridging loans too.
The rates and arrangement fees chargeable also vary substantially between bridge loan providers, so it's crucial to have a broker identify the most competitive products and negotiate terms on your behalf.
