fbpx
  • About us
    • About MFS
    • Meet the MFS Team
    • Our Business Development Managers
  • Bridging
    • Our Products
      • Residential & Buy-to-let
      • Large Bridging Loans
      • Commercial & semi-commercial
      • Permitted & light development
      • Developer Exit Bridging Loans
      • Auction bridging loans
      • Overseas / Foreign Nationals bridging loans
      • Complex bridging loans
      • Second charge bridging loans
      • Refinance bridging loans
    • Our Case Studies
    • What is a Bridging Loan?
    • Who do we lend to?
    • Bridging Loan Calculator
    • Bridging Loan Rates
    • Glossary of terms
    • FAQ
  • Buy-to-Let
    • Buy-to-Let Mortgages
    • Buy-to-Let Calculator
  • Intermediaries
  • Investors
  • News
    • Media coverage
    • Events & Awards
    • Press Releases
    • Blog
    • Reports
  •  Contact us
Search
START TYPING AND PRESS ENTER TO SEARCH
  • About us
    • About MFS
    • Meet the MFS Team
    • Our Business Development Managers
  • Bridging
    • Our Products
      • Residential & Buy-to-let
      • Large Bridging Loans
      • Commercial & semi-commercial
      • Permitted & light development
      • Developer Exit Bridging Loans
      • Auction bridging loans
      • Overseas / Foreign Nationals bridging loans
      • Complex bridging loans
      • Second charge bridging loans
      • Refinance bridging loans
    • Our Case Studies
    • What is a Bridging Loan?
    • Who do we lend to?
    • Bridging Loan Calculator
    • Bridging Loan Rates
    • Glossary of terms
    • FAQ
  • Buy-to-Let
    • Buy-to-Let Mortgages
    • Buy-to-Let Calculator
  • Intermediaries
  • Investors
  • News
    • Media coverage
    • Events & Awards
    • Press Releases
    • Blog
    • Reports
  •  Contact us
Search

What is a bridging loan?

Key Information

What is a Bridging Loan?

A bridging loan is a form of alternative finance that provides property investors with fast and flexible finance for their residential investments. These short-term loans help to bridging the gap between payments. People or companies often use them to:

  • Secure pay for an asset whilst they arrange a long-term financial solution
  • Move home to bridge the gap between the sale and completion dates in a chain.
  • Planning a quick turnaround on a renovation project
  • Buy property at auctions.

Most of the time they use some form of collateral as security, such as real estate or stock inventory. The lengths can vary depending on your bridging lender – our MFS bridge loans are available from 3 – 24 months.

You’ll need to repay our bridging loan in full at the end of your term. This means that you’ll have to arrange an exit strategy.

Why use a Bridging Loan?

Bridging lenders can move far more quickly than a bank when a borrower needs funds to buy a property. Generally, they only need a few days to complete a deal and send the funds required.

In comparison, approval for a mortgage can take 30-45 days on average, sometimes longer in complex circumstances.

This potentially places a great deal of stress on auction buyers, who usually only have only 28 days to pay for any purchases in full.

Another potential benefit is the flexibility available when repaying the loan – most companies offer “serviced” repayments. This is where the borrower pays monthly interest. “Rolled up” repayments are when you delay payment until the end of the term.

Many bridging lenders allow for a mixture of both forms of repayment.

What can you use a Bridging Loan for?

Most Bridging Loans are used for residential or commercial purposes.

Here are a few situations where people could use a Bridging Loan:

  • Buying a property at auction
  • Purchasing a property whilst selling another
  • Adding to a property portfolio
  • Buying a run-down property for renovation with a quick sale in mind
  • Moving office / factory / warehouse

This is not an exhaustive list however, and that is the clear advantage of using a Bridging Loan – they are flexible enough to adapt to almost any situation where short-term finance is needed.

NB – it is important to have a clear exit strategy in mind or already in place.

How does a Bridging Loan work?

When you apply for a loan, the lender adds a charge to the property you are using as security.

This is needed in order for them to secure the loan against that property.

There are two types of charge for Bridging Loans

  • First charge is where the loan is the first, or only borrowing secured against your property. Mortgages are an everyday example of a first charge loan.
  • Second charge is where there is already a loan or mortgage listed against the property, so you add a second charge loan against the property to raise additional funds.

If a property with a 2nd charge bridging finance became repossessed and sold to pay off any outstanding finance, a first charge loan would receive repayment in full first. Only then would the second charge lender receive their repayment from the amount left from the sale. This makes a second charge loan more risky for bridging lenders, which is why they often have a higher monthly rate charge in comparison to first charges.

The process will vary from lender to lender, however here at MFS we follow six simple steps:

  • Bridging Loan enquiry is received
  • Indicative terms are issued (as quickly as within 4 hours), subject to credit approval and receipt of information
  • Decision in principle (DIP) issued, subject to valuation, due diligence and legal terms
  • Valuation instructed, commitment fee received, and solicitors instructed
  • Legal paperwork issued and commitment fee refunded
  • Loan drawn down (funds issued)

Why choose MFS as your Bridging Loans lender?

MFS is a bridging lender with a 14-year track record in providing quality bridging loans.

We have highly experienced underwriting staff who are specialists in complex circumstances, meaning we can react quickly and efficiently to any potential arising issues.

To help borrowers in special or complex circumstances, we do not respond to a tick-box criteria. Instead, we take the applicant and the property into consideration by viewing their own individual merit. Meaning we can provide finance for those with adverse credit, CCJs, complex company structures or undervalued properties.

You could see funds in your account in as little as three days. We can turn enquiries into bridging loans within three to ten days.

Your rate will not be changed at any point during your bridging term with MFS and as we present all of our changes upfront – you can be sure there are no hidden fees.

Download our product guide

Contact us

Contact us today

Get in touch with our team

We will get back to you within 4 hours
Enquire

Our latest blog posts

costs of a bridging loan

Costs of a bridging loan: what you need to consider

After serval years in the industry, one common question we hear a lot is – how much does a bridging loan cost? Whilst this isn’t a ‘one-answer-fits-all’ question, we’ve provided ...

Read more
eco privilege

What is eco privilege and how can MFS help BTL landlords?

New sustainability initiatives are being introduced for buy-to-let properties in the UK, but the availability of funding is causing a rift between landlords and leading to ‘eco privilege’ where larger ...

Read more
what is gazumping

What is gazumping and how can fast finance help tackle the issue?

As the UK property market remains highly competitive, gazumping is becoming a common tactic from desperate buyers. This is due largely to the limited supply of homes compared with the ...

Read more
  • About Us
  • Bridging
  • Buy-to-let
  • Intermediaries
  • Investors
  • Contact Us

Address

Market Financial Solutions
46 Hertford Street
Mayfair
London W1J 7DP
United Kingdom

Visit Us On FacebookVisit Us On LinkedinVisit Us On Twitter

Registration Details

Market Financial Solutions Ltd is registered in England No. 5994359

Market Financial Solutions Ltd is registered under the Data Protection Act 1998, Registration no. Z1858385

Policy

  • Home
  • Terms & Conditions
  • Privacy Notice (GDPR)
  • Complaints Policy
  • Glossary of Terms

Search

Market Financial Solutions Ltd is registered with the FCA for supervised anti-money laundering.
Registration no. 769165

© Copyright 2022 - Market Financial Solutions

Close