Fast Bridging Loans

A bridging loan is a type of short term loan, lasting up to 18 months. It is used to bridge the gap between the purchase and sale of something, usually a residential or commercial property. 

Bridging finance is a popular form of funding because it allows the customer to become a cash buyer. Hence, it helps property developers and ambitious property buyers to avoid traditional delays associated with mortgages and property chains and complete deals in a number of weeks rather than months.

Bridging is a type of secured loan, which means that you run the risk of losing your property if you are unable to keep up with repayments.

As an independent private bridging lender, we have the facility to make fast decisions and complete within 2 weeks. With more than 30 years of experience in property, we understand the need for quick completion and can offer fast funding through our personal connections with family offices and high net worth private individuals.

Bridging loans allow you to access a large sum of capital upfront and this can be used to make an immediate purchase of a property. 

• You may be on a tight deadline and want to secure the property purchase before someone else does
• You may have purchased a property at auction and have 28 days to come up with the funds
• You may need funds to purchase a new property before you have sold your existing one and need to free up cash

With bridging, it is essential for the customer to have a clear exit plan and a determined date by when they expect to remain the entire loan in full (known as a closed bridging loan). 

For some customers, the end date is open-ended (known as an open bridging loan) and depending on whether they develop, resell or rent out the property, they may decide to refinance at the end of the loan term under different terms.

Open Bridging Loans – This is where there is no set date for paying off your bridging loan and this could be because you are waiting to sell an existing property and use these funds to pay back the full loan amount. Blue Square has a maximum loan term of 15 months so you will need to repay or refinance within this timeframe.

Closed Bridging Loans – Here you have a fixed repayment date and this could be because you have a clear strategy in place to renovate a property, rent it out to tenants or flip the property and sell it for a higher amount.

First Charge and Second Charge Loans – With every bridging loan, a charge is placed on your property. With a first charge, this is the first priority when it comes to being paid out of your account and a second charge is therefore the second priority. If you have a mortgage already on the property, the bridging loan becomes a second charge by default. You can typically borrow a lot more on a first charge than a second charge (also known as a second mortgage).

Fixed or Variable Interest – With bridging, you will be paying either a fixed interest each month or a variable interest rate that changes during the duration of the loan due to market rates.

Bridging loans are most commonly used by property developers and investors to complete property purchases within a tight deadline and to free up capital to allow for a faster completion including:

• Buying property at auction
• To cover renovation and refurbishments with a view to increase the property’s value and potentially rent out or resell at a higher price
• Purchase and develop land
• Business purposes – various companies use bridging to free up cash, using their assets as security
• Fix a property chain – if someone has pulled out of a purchase in a long property chain, a bridging loan can create a cash buyer to allow the deal to go through
• House purchase – to buy a new house before making a sale on their existing one (this falls under regulated bridging)

Fast Decision – Compared to mortgages, bridging lenders like Blue Square Capital are independent and can make decisions within 24 hours and can often approve and fund loans within 1-2 weeks.

Flexible Structures – Unlike mortgage and traditional products to purchase properties, bridging can be very flexible in terms of repayment and structured according to every case.

Large Facilities – You can borrow up to £2 million in one lump to fund a property purchase.

We handle every customer enquiry on a case-by-case basis and being an independent private bridging loans lender allows us to take a view on all personal circumstances and backgrounds. 

To improve your chances of approval, we always encourage customers to have a clear strategy and exit plan for their bridging loan. The use of due diligence, financials and well-thought costs (building, construction, stamp duty, legals) can help strengthen your application and having a property as security that is valuable and in good condition provides a strong foundation.

We do not use credit checking as the determining factor for your loan – but rather we are interested to hear your plans for the property and its potential value.

Blue Square Capital offers rates starting from 0.95% per month which remains fixed through the loan term of up to 15 months.

Other costs to be aware of include:

• Arrangement fees (2% of the loan amount)
• Bank transfer fee (£25)
• Admin fee (£999)
• Valuation and survey fees (depends on property)
• Solicitor fees (depends on project)
• Exit fees (n/a)

What Kind Of Properties Can I Purchase Using Bridging Loans?

• B&Bs
• Care homes
• Farms
• Garage units
• Guest houses
• Gyms
• HMOs
• Hotels
• Land with planning
• Land without planning
• Leisure complexes
• Offices
• Property in a poor state of repair
• Pubs
• Residential property
• Retail units
• Semi-commercial property
• Shops
• Warehouses

What Areas Of The UK and Wales Do You Cover?

We cover the whole of the UK and Wales and all major cities including Birmingham, Brighton, Bristol, Cardiff, Exeter, Leeds, Leicester, Liverpool, London, Manchester, Newcastle, Norfolk, Nottingham, Sheffield and more.

What Is The Difference Between Regulated and Unregulated Bridging?

Regulated bridging loans are used when the borrower lives in the property that the loan is secured against. Since it is their primary residence, there is regulation in place to protect customers from losing their home. With regulated products, there is a maximum loan term of 12 months and more checks may be required before approval.

Unregulated bridging loans (offered by Blue Square Capital) are mainly for investment purposes and used by intermediaries, property investors, developers and landlords as a way of raising capital for a quick purchase. With unregulated activity, loan durations can be longer (even up to 24 months) and rates charged can be higher.

Can I Repay My Bridging Loan Early?

Yes, you can repay your bridging loan at any time before the 15 month maximum and you can even repay in full after 1 month, however, you may be subject to early exit fees.

What Happens If I Cannot Repay At The End Of My Loan Term?

If you are unable to repay your bridging loan at the end of the term due to unforeseen circumstances, delays or lack of sale of your existing property, there are potentially late fees and penalties that apply.

Very often, customers will refinance under different terms, but in extreme cases, your property or investment could be repossessed. 

What Are The Alternatives To Bridging Loans?

Alternatives to bridging loans include residential or commercial mortgages, personal loans (usually only up to £50,000), secured loans, second mortgages and private investors.

How Long Does It Take For a Bridging Loan To Be Approved?

Blue Square Capital can offer indicative quotes and an initial decision within 24 hours. Subject to further checks and a review of financials and plans, we aim to complete bridging loans as fast as possible. We have successfully completed and funded a number of deals within 2 weeks.

Is A Bridging Loan Funded in One Lump Sum or Tranches? 

A bridging loan is funded in one large lump sum.

Do Bridging Lenders Run Credit Checks?

At Blue Square Capital, we do run credit checks.

Can I Apply With Bad Credit?

Yes, we are able to take a view with customers with bad credit and adverse credit histories, but require a stable financial background and exit plan to meet our eligibility requirements.