We have access to all the best bridging loan providers, plus a range of exclusive facilities that are useful for applications that fall outside general lending criteria.
“At KIS Bridging Loans we will take the time to fully understand your plans and finance requirements, before finding the best possible deal on the facility that is best suited to your requirements.“
Extensive lending facilities
- Bridging finance from £100,000 to £1 billion
- Immediate in principle decisions
- Fast funding (48 hours is possible)
- Loan terms ranging from 1 day to 24 months
- Up to 80% Open Market Value
- Most competitive bridging loan ratesfrom 0.5% pm
- All round most competitive finance deals
- Interest roll up facilities or pay monthly
- Poor credit history
- No income proof
- Non UK residents
- All types of property and land
- All of the UK (facilities also for Europe,USA and Canada)
- Poor condition/dilapidated property
- All types of construction
- Complicated cases a specialty
- Valuations not always required
- 1st, 2nd, 3rd, equitable and unilateralcharges available
Any purpose bridging finance
- Fast short term finance
- Maintaining place in a sale chain
- Chain breaks
- Auction purchases
- Property development
- Lease extensions and freehold purchases
- Renovation, conversion and refurbishment
- Credit repair (clear bankruptcies, IVAs, arrears)
- Payment of HMRC liability (Tax, VAT,Inheritance tax)
- Legal and litigation fees
- Repossessions stopped
- Business cash injection
- Business expansion
- Refinance an existing bridging loan
- Raise funds on unmortgageable properties
- Must have purchases, a bargain propertyor other item
What is a bridging loan?
They are large short term loans, of amounts ranging upwards of £100,000, that use the available equity in property as security. When short term funding is required a bridging loan is often the cheapest and also quickest option.
Bridging loans can be secured on… [Read More]
- Residential property
- Mixed use property
- Care homes
- Industrial units
- Leisure complexes
- Retail units
- Farm land
- Development land
- Property in a poor condition
- All construction types
What is a commercial bridging loan?
These are typically used by individuals and businesses who require fast short term finance, and use commercial property as their security.
Commercial bridging loans are often used to… [Read More]
- purchase property that is unsuitable security for a traditional lenders – when a buy to let or commercial mortgage is unavailable due to a property’s construction, state of repair, because it is going to be converted, demolished and rebuilt, etc
- stop repossession – may need to clear arrears or completely repay a lender before a property is repossesses
- fulfill a large order – upon receiving a large order a business may need quick short term funding in order to buy the materials and pay staff in order accept and complete an order
- pay urgent tax demands or replace funds when an overdraft or other facility is unexpectedly called in
- provide a cash injection to a business in order to pay bills whilst waiting for invoices to be paid or an alternative finance facility to be put in place
- to purchase a bargain – a property or other item may become available that can be purchased cheap if the sale can be completed quickly
How does a bridging loan work?
A bridge loan uses the equity in property as security for a borrowing facility. Unlike other secured loans and mortgages, a bridge loan can be set up quickly and can make use of property that would normally be considered unsuitable security for many lenders. [Read More]
It is important to remember that bridge loans are a short term finance method, so should not be taken out for long periods. As a short term method of finance they have advantages over other funding methods because:
- Many facilities do not have exit or redemption fees.
- They can be set up quickly.
- Can make use of property that is in a poor state of repair and therefore unsuitable security for most lenders.
- Interest charges can be added into the bridge loan for the full term, or a set number of months, and paid when the loan is redeemed.
- Income proof and affordability calculations are not a limiting factor if interest is added to the facility.
- A Poor credit history is ignored by many bridging lenders.
- Less age restrictions.
What can bridging loans be used for?
There are many advantages of bridging loans when compared to other types of finance. When finance is only required for a short period of time, they often provide the cheapest option for raising the required funds. In addition they are fast to arrange, have flexible lending criteria so that approvals can be given quickly without extensive checks, and they can be secured on all types of property, including property that is unsuitable to other lenders.
Bridging loans can be used for a variety of different reasons
Maintaining a place in a sale chain[Read More]
When a property purchase is being funded from the proceeds of the sale of another property, but the sale cannot be completed before or at the same time as the purchase, short term finance maybe required in order to bridge the gap so that the purchase can still proceed. The bridge is just until the sale has been completed, upon which the proceeds of the sale are used to repay the bridge. This is a very traditional use of bridging loans and quite often thought to be the only reason for using one. However there are many other uses!
Buying a property at auction [Read More]
After making a winning bid at auction typically a 10% deposit is paid that day, and the rest of the agreed purchase price is required within 28 days. This period can sometimes be even sooner! Please see our auction guide for further information about buying properties at auction. Bridging loans are used to buy properties at auction because they can be set up quickly ensuring that purchases can complete within the required timeframe.
For quick purchases when a bargain property or other must have item comes along [Read More]
Often in order to secure the acquisition of an absolute bargain, the purchase would need to be completed quickly. Funds may not be available to enable the purchase as capital is often tied up in property or some other asset. A bridging loan can be arranged quickly, secured against the available equity in property. The bargain item can then be sold for a quick profit and the bridging loan repaid, or the item maybe kept and a more suitable longer term finance option can be arranged to repay the bridge.
Solve business short term cash flow problems [Read More]
Cash flow problems can arise for a number of reasons when running a business. For example a bank may call in an overdraft facility, customers may be late paying their invoices, seasonal factors or new equipment may be unexpectedly required.
Inheritance tax and probate issues [Read More]
Sometimes funds are required when dealing with inheritance and probate issues. There are many reasons including having to release charges on property, pay tax and other bills, and also to pay off other beneficiaries.
Renovating, converting or restoring properties [Read More]
Very often property is considered to be unsuitable for mortgage purposes. This is usually due to it being in a poor condition, or in the case of residential property and buy to let mortgages it may be just because the property lacks a kitchen or bathroom. Bridging finance can be secured against property that other lenders consider to be unsuitable. This is very useful for property developers and landlords who want to buy a property to restore and then sell, or refinance with a buy to let mortgage, keeping it to rent out.
Buying property below market value [Read More]
Many bridging lenders will lend against the open market value of a property and not the purchase price. This is useful when buying property that is selling for a price below its market value, for some genuine reason!
Repossession prevention [Read More]
If a property is due to be repossessed a bridging loan can be used to pay off the debt and prevent the repossession. This then enables an owner to retain control of the property so that they can sell it on their terms and avoid a forced sale situation.
Property development [Read More]
Bridging loans can be used to raise the funds required to finance property developments.
Advantages of bridging loans
Fast to arrange [Read More]
When a finance facility is required to raise a large sum of money this would normally be achieved through the use of a business loan, or a commercial, residential or but to let mortgage. These types of facilities can take weeks or even months to arrange. We can arrange fast bridging loans, meaning that funds can be in your bank account in as little as 48 hours.
Flexible lending criteria [Read More]
There are many different bridging loan providers who all have their own unique lending criteria. Generally bridging lenders are not concerned with income, affordability and credit history. They do however want to know about the value of the property being offered as security and also the exit route. This is the method by which the bridging loan is going to be repaid before or at the end of the term.
All types of property can be used as security [Read More]
A bridging loan can be secured against houses, flats, maisonettes, shops, mixed use properties, commercial units, offices, care homes, leisure complexes, farms, land, building plots, development land. Property can be freehold or leasehold even when the leasehold only has a short time left to run.
Property that is in a poor state of repair [Read More]
Property being offered as security can be in poor condition, derelict or in need of major restoration. Bridging loans are often used to raise funds when the security property is unacceptable to a mortgage provider.
Non standard property construction [Read More]
Many mortgage providers will only lend against property that is classed as standard construction. Bridging loans can be secured against property that are of a non standard or unusual construction.
Multiple properties can be used as security [Read More]
One bridging finance facility can make use of one or more properties as security. This can be on a first or second charge basis, or a combination of both! For example in order to buy a property the full purchase price may need to be raised. Therefore a bridging loan could be set up making use of a first charge on the property to be purchased plus a second charge on another property that already has a mortgage on it, but has equity available.
Disadvantages of bridging loans
Bridging loans are only intended as a short term finance option. [Read More]
Their monthly rate of interest is high when compared to other methods of finance, so should not be used as a long term option. It is essential to have an exit strategy because at the end of the agreed term the bridging loan will need to be repaid.
Bridging loan interest rates and other costs
There are many costs to consider when taking out bridging finance. The first and most important is the bridging loan interest rate, usually expressed as a monthly rate. This rate when compared to other finance options will usually seem high, which is why bridging finance should only be used as a short term funding option. [Read More]
It is also very important to consider all the other costs because they quickly add up. The best way to compare options and fully understand what a bridging loan is going to cost, is to add up all the interest charges for the period you are likely to have the loan and add this figure to all the other costs involved. Do this for each quote to compare bridging finance options.
Interest roll up [Read More]
The monthly interest charged on a bridging loan can be paid monthly, but for most facilities there is an option to have the interest rolled up, retained or deferred, which means no monthly payments have to be made and the interest is paid at the end of the term when the loan is redeemed.
Facility fee (lender’s arrangement fee) [Read More]
Charged by the lender this typically ranges from 0 to 2% of the amount being borrowed and is included in the loan facility.
Exit fee [Read More]
Some plans have an exit fee which is similar to the facility fee but charged and added to the loan when it is redeemed. Nearly all the bridging loans that we arrange do not have exit fees.
Legal fees [Read More]
In addition to paying your own solicitor a bridging lender will also require you to pay their legal costs for setting up the facility. Legal fees can vary considerable depending on the lender.
Administration fees [Read More]
Most lenders usually slip an administration fee into their agreements.
Valuation fees [Read More]
To set up most bridging loans a valuation will usually be required. In the absence of a suitable valuation/survey report we will need to arrange one. Although we will instruct the valuation, the surveyor or lender will contact you in order to take payment. Because valuations are carried out before a loan is completed this fee is not added to the loan facility, but is usually the only upfront fee. We ask our clients to pay the lender or surveyor directly for the valuation (they call you to take payment over the phone or a bank transfer) because we don’t add anything to the valuation fee for ourselves.
Factors that can influence bridging loan interest rates
There are many bridging loan providers in the UK who between them provide a wide range of short term borrowing facilities. A common factor with most of these lenders is that the interest charged is based on a monthly rate of interest. This is mainly because of the short term nature of bridging loans where the money provided is usually only required for a period of months and not years. There are of course a wide range of monthly interest rates being charged, from as low as 6.8% per month to as high as 2% and above. In addition to certain lenders being much more competitive than others, the monthly interest rates charged on bridging loans will depend on a large number of factors:
Loan to value [Read More]
The greater the amount of equity that is being provided by the borrower, means the smaller the risk to the lender. Therefore lower monthly rates of interest are achieved the lower the loan to value, when considering the value of the security compared to the amount being borrowed, plus any additional borrowing also charged on the security property.
Type of legal charge [Read More]
There is less risk involved to a bridging lender if they are able to have first charge over the security property. Therefore the lowest interest rates are achieved when the lender has first charge. There are many facilities available when the security property is already being used to provide equity for another lender, typically a mortgage company. Taking a second charge behind another lender is a greater risk to a lender, and this usually reflected in a higher interest rate than if a first charge had been obtainable. There are also a very limited number of lenders who will provide a third charge, which due to their nature are more expensive again.
Type of property being used as security [Read More]
This can be divided into 3 main categories, residential, semi-commercial and commercial property. The best security is provided by residential property and therefore this type of security preferred by the lenders and attracts the lowest monthly rates. Commercial property is a more risky proposition for lenders because values can drastically drop over a short period of time. This can clearly be illustrated by the number of empty or derelict commercial premises that have very little value today but were once very valuable. Semi-commercial property such as local shops with living accommodation above are considered to be less risky security than commercial property, but of a greater risk than residential property. The level of risk is reflected in the monthly rate of interest offered.
Condition of the security property [Read More]
The high street lenders usually require any property being used as security to be in a reasonable condition and state of repair. Many bridging loan providers are happy to provide loans secured on property that would be deemed unacceptable security for most other lenders. The condition of the property and the amount of work that the property requires will influence the monthly interest rate offered.
Location of the security property [Read More]
Some bridging lenders will only lend against property in London, whilst others will lend throughout the UK. Property in and around London is favourite and certainly command the lowest interest rates due to the increased completion amongst lenders keen to lend. Moving away from London sees some lenders withdrawing to the point that in Scotland there is a very limited number of bridging loan providers. Differences in the property law in Scotland, when compared to England and Wales, is also a factor.
Income and affordability [Read More]
A lender will enquire about their customer’s earnings and income to see if they are able to afford to pay the interest payments. This would apply to all customers including individuals who are employed, self employed or retired and also to businesses applying for a commercial bridging loan. An applicant’s ability to comfortably make monthly interest repayments will of course be attractive to any lender, and will therefore help to attract the most competitive rates. It is however important to remember that being unable to make the monthly interest repayments does not necessarily exclude an individual or business from obtaining a bridging loan because facilities exist to add the interest to the facility so that it can be paid at the end.
Term [Read More]
The period for which the money is required will determine the rates available. Since most bridging lenders have a maximum term of 12 months there are more limited options for loans that are required beyond this term.
Credit history [Read More]
Most lenders want to see a reasonably good credit history. Therefore County Court Judgements, credit and mortgage arrears, defaults, IVAs and bankruptcies will signify a greater lending risk which will most probably mean an increased monthly rate of interest.
Cost and availability of funds to the lender [Read More]
Interest rates for all types of lending are very much influenced by the price that the lender has to pay for their funds, and also the availability of funds. When lenders are low on funds they will tend to increase their rates, like most supply and demand situations.
It is important to remember that the monthly interest rate charge on any bridging loan is just one of the costs to consider. When comparing facilities attention should also be paid to arrangement fees, broker fees, administration costs, legal costs and fees, valuation fees, exit fees, redemption penalties and discounted rates that are only for a short period of time.
Differences between open and closed bridging loans
Before taking out any type of short term finance you need to make sure that you have an exit strategy for how you are going to repay your loan back at or before the end of its term.
Closed bridging loans [Read More]
If the loan is to be repaid on a set date, for example from the sale of a property where contracts have already be exchanged and a completion date set, or from the proceeds of an investment policy due to mature of a specific date, then this is known as a closed bridging loan.
Open bridging loans [Read More]
However, if there is no firm date on which the loan is to be repaid, for example the exit route is the sale of a property that hasn’t yet got a buyer and could sell anytime within a week to a year, this is known as an open bridging loan.
The lenders do prefer closed loans, but for most applications these days it doesn’t make that much difference with regards to finding a facility, rates and costs. This is because the bridging market is currently very competitive.