What is a bridging loan?

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.

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.

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 2^nd 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)

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.