In This Article
What is a bridging loan broker?
A bridging loan broker is a broker that specialises mainly in arranging short term finance products, usually known as bridging loans.
Bridging loans are often taken to bridge the gap on a property that is being financed. For example, you are buying a property in London and due to money in another asset being tied up (for example, there is a house in the background for sale with plenty of equity, but it will take a while to sell) short term finance is required so the purchase in London can go through. When the house is finally sold, the bridging finance is paid back from the proceeds of this sale.
Another common use for bridging finance is to buy or refinance properties that do not yet qualify for a standard mortgage. An example of this would be buying a run-down property in London with no kitchen, bathroom, requiring a full renovation etc and the house being too much in a state of disrepair to get a standard mortgage.
Once the property has been fully renovated and has become a luxury London home, it may be re-mortgaged on to a standard product to repay the bridging loan.
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Does the bridging loan broker need to be in London themselves?
When you are looking for a bridging loan broker to give you advice on your bridging loan in London, you may wonder whether location is important. Generally, the location of the broker is not important so they could be anywhere in the UK and still be able to arrange the loan in London.
Rather than pick the broker based on their location, look at their experience and suitability for arranging the loan. Many good bridging brokers give advice over the telephone and by email covering all parts of the UK which can save time if you do not have to go back and forth to an office to have meetings.
Some people much prefer to meet face-to-face, and this is the case, they should deal with bridging loan brokers in London. Still make sure to do the same due diligence.
Will my London bridging loan broker be regulated?
It is likely that your bridging broker will be regulated by the Financial Conduct Authority and they will especially need to be if the bridging loan in London that is being arranged is a regulated bridging loan.
The bridging loan would be regulated if the property is lived in by you or your family or will be in the future. Click here to view the FCA register to make sure your broker is regulated.
The bridging loan would not be regulated if the property in London is to be an investment property or for commercial use. Even if the loan isn’t regulated, it’s likely that your broker will be, or they may be members of the National Association of Commercial Finance Brokers.
What are the costs of a bridging loan broker in London?
It’s difficult to say the costs of a bridging loan broker in London as they will vary between different companies. A common amount for a bridging loan broker charges is approximately 1% of the loan.
This could change depending on how much you need to borrow and how complex the scenario is. Your bridging loan broker will tell you before carrying out the work, what the cost would be for arranging the finance.
There are other costs to take into consideration when arranging a bridging loan. These are things such as the valuation fee, a full survey if you need to get one, the arrangement fee to the lender, the legal fees applicable to the solicitors, exit fees and of course the interest itself.
Work with your broker at the beginning to calculate all of the fees that will be applicable to your transaction so you can make sure that the project is financially viable.
You will also need to factor in Mortgage brokers fees.
How do you decide who to use when looking for a bridging loan broker for a London property?
Choosing a suitable bridging loan broker to help you with your property in London may be a bit of a minefield. It’s best to make sure that they have experience arranging the type of bridging loan that you need.
If you have not worked with a bridging loan broker before, perhaps ask for referrals from people that you know that have taken this kind of finance before and had a good experience.
Always do your research on the company by checking customer reviews. Different companies will use different review sites such as Google, Unbiased and Trust pilot.
If you are buying a property, your estate agent may be able to recommend an experienced bridging loan broker that is able to help you. Alternatively, if you would like I NEED ADVICE to find you an experienced broker to help you with your bridging finance in London, please complete the contact form.
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Is it easier to get bridging loans in London than in other parts of the country?
It’s not necessarily easier to get a bridging loan in London than it is in another part of the UK, however there are occasions when a lender may accept a certain property as security for the loan because it’s in London when they may not have accepted it elsewhere.
For example, if you had a flat on the 15th floor of a 25-floor block in Kensington, and the building was ex-council, there may be lenders that would take the property on due to the location. If that same flat was in Salford, there would be lenders that would decline it.
It doesn’t mean to say that lenders will take on any property because it’s in London but on occasions, it may allow them to be a bit more flexible. The reason behind this is they believe that certain locations will allow the property to sell quicker if priced correctly.
What types of London properties can bridging finance be arranged against?
Within reason, bridging finance can be arranged against all types of property. it depends upon the nature of the transaction and whether or not the bridging finance is regulated.
If the finance is regulated, it’s likely that the property in London will just be a standard house or a property that will become one in the future.
If the bridging finance is unregulated, the type of property that it is secured against could be almost anything. This could include Blocks of flats, pubs, hotels, factories, offices and more.
What the property is and what it will be used for will make a big difference when underwriting the loan. Talk to your bridging loan broker about your individual scenario to let them find a suitable lender for you and the property.
Do all lenders offer bridging loans in London?
No, not all lenders offer bridging finance. Bridging loans are considered specialist so only certain banks or Specialist Lenders offer them. If you are a customer of your average high street bank, it’s unlikely that they would be able to offer you a facility like this.
That’s why we always recommend reaching out to an experienced bridging loan broker who will be able to assess your scenario and know which lenders to approach.
I’m thinking about buying a London property at auction requiring a bridging loan, do you know of any property auctions?
Bridging loans are often used to facilitate auction purchases due to the often urgent nature of the transaction. When buying a property at an auction, you are expected to exchange contracts on the day putting down a non-refundable deposit. You then have a certain amount of time to complete the transaction in, usually around 28 days.
As a result, this often does not allow time for a standard mortgage to go through requiring the purchaser two need auction finance.
If you know what you are doing, money can be made when buying through property auctions, but it is of course very risky so do your homework.
If you were looking to attend a property auction in London, popular ones are Allsop and Barnard Marcus Auctions.
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How can I NEED ADVICE help when looking for a bridging loan broker in London?
If you are looking for a bridging loan broker to help you with the financing of a property in London or any other part of the UK, we can find a qualified, experienced broker with the expertise to assist you.
If you complete the contact form giving information about what it is that you need help with, we will arrange for a specialist to get in touch.
There will be no obligation to go ahead with anyone we work with, and they will not charge you for the initial consultation.
The information on this page is not tailored to any individual readers and should not be considered financial advice under any circumstances.
If you are seeking advice about a mortgage, you should consult a qualified professional.
