Short Term Property Finance
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We are experts in sourcing short term property finance on residential and commercial property transactions in the UK
Our short term finance service provides:
- Market leading short term loans from £50,000 to £25m
- Rates from 0.44% pm
- Lower rates for £1 million+ loans
- £99 valuation option for properties up to £1 million
- Terms from 1 month to 3 years
- Lona to value (LTVs) up to 80% -can be more if other assets in the background
- Interest roll up options
- Residential (On a regulated basis), buy to let, HMO, investment and commercial properties considered
- Light refurbishment loans (currently uninhabitable, under permitted development rules, require internal refurbishment)
- Heavy refurbishment loans (Extensions, basement digs, conversions, commercial to residential, barn conversions)
- Bridging loans for business purposes (Pay HMRC tax bill, purchasing land or new premises, deposit for new purchase, business growth)
- Alternative assets considered e.g. pension, investment porfolios, fine art, classic cars
- We provide a friendly, professional service to help you get the money you need at the best available rates
Rates from: Downsizing/Upsizing Releasing Funds From Your Home Short-Term Lease Finance Auction Purchase As at 21st May 2024 Rates from: Light & Heavy Refurb Finance For Unmortgageable Properties Land Purchase with planning As at 21st May 2024 Rates from: Up to 80% LTV Minimum Loan £500k Minimum net income £100k As at 21st May 2024 Thank You for your interest - please complete the form below and a member of our team will be in contact.Residential
Buying Before Selling?
0.55% pm
Development & Refurb
Fast Finance
0.55% pm
Residential
Large Bridging Loans
0.55% pm
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We can help with meeting tight deadlines & provide a fast and professional service.
Call us on 0117 959 5094 to discuss your requirements or book a free consultation below.
What is the Most Common Type of Short Term Property Finance?
Bridging finance is the most common forms of short term property financing. A bridging loan is a short-term financing option used to fill a gap in finances before a large payment such as the sale of a house or business. The most common use for a bridging loan is to break a chain when purchasing a property. Bridging loan funds can typically be accessed a lot quicker than a mortgage, so if time is of the essence, you could use a bridging loan to buy a house before selling your current home.
Because they’re short term, bridging loans can have flexible terms, usually up to 12 months, and unlike mortgages, they rarely have Early Repayment Fees. Additionally, if you pay off your loan within the terms, you’ll only pay interest on the months you had the loan for.
The application process for bridging finance is usually significantly simpler than with long term financing such as a mortgage, and there’s less emphasis on factors such as your income or credit score.
Bridging loans are repaid in a lump sum, so your affordability will typically be based around whether you can realistically sell an asset within the allocated timeframe, or refinance to a mortgage.
Written by: Sam O'Neill & Sam Hodgson
What Other Types of Short Term Property Finance Are There?
Second Charge Mortgages
A second charge mortgage is a loan secured against the equity in a property that already has an existing mortgage. It allows homeowners to borrow additional funds without altering their primary mortgage. The loan amount is based on the equity left after deducting the balance of the first mortgage. Second charge mortgages are used for purposes like home improvements or debt consolidation and typically offer lower interest rates than unsecured loans because they are secured against the property.
A second charge mortgage is still a mortgage, so there’s isn’t an option for terms as short as a bridging loan, but you can get a second charge mortgage with as little as five-year terms.
Remortgaging
Remortgaging to release equity involves switching to a new mortgage deal that allows homeowners to access some of the equity (the difference between the property's value and the outstanding mortgage balance) they have built up in their property over time. This process essentially involves borrowing more money against the value of the property, increasing the size of the mortgage.
Homeowners typically choose to release equity for various purposes, such as home improvements, funding education costs, starting a business, or consolidating higher-interest debts into a single, more manageable payment. By remortgaging, they can secure a larger loan amount than their current mortgage balance, using the property as collateral.
The amount of equity that can be released depends on factors such as the property's current value, the outstanding mortgage balance, and the lender's criteria. It's important to carefully consider the costs involved, including potential arrangement fees, valuation fees, and any early repayment charges from the existing mortgage lender, to assess whether remortgaging to release equity is financially beneficial in the long run.
Development Finance
Development finance is a type of funding specifically tailored for property developers to finance construction or renovation projects. It is designed to cover the costs associated with acquiring land, obtaining planning permissions, and developing properties into residential, commercial, or mixed-use buildings.
Development finance loans are typically structured with flexible terms that accommodate the project timeline, often ranging from several months to a few years. These loans can be used for ground-up developments, conversions, refurbishments, or property renovations, providing developers with the necessary capital to start and complete construction phases.
Interest rates for development finance tend to be higher than traditional mortgages due to the higher risks involved in property development. Lenders assess the viability of the project, the developer's track record, and the potential profitability of the development when determining loan terms.
Development finance plays a crucial role in the property development sector by enabling developers to undertake ambitious projects that contribute to urban regeneration and meet housing and commercial space demands in growing markets.
Commercial Mortgages
Commercial mortgages are loans specifically designed for businesses and investors to purchase or refinance commercial properties. These properties can include office buildings, retail spaces, industrial facilities, and mixed-use developments.
Unlike residential mortgages, which are used for homes occupied by the borrower, commercial mortgages are used for properties intended for business or investment purposes. They typically have longer terms than residential mortgages, ranging from 5 to 25 years, but it is possible to arrange short term commercial mortgages with terms as short as one year.
However, commercial mortgages may require a higher deposit or equity contribution from the borrower. Interest rates and terms vary based on factors such as the borrower's creditworthiness, the property's value and potential income, and prevailing economic conditions.
What Is The Eligibility Criteria For Short Term Property Finance?
The main factor determining whether you’ll qualify for a bridging loan is whether you have a sure-fire way to repay it within the timeframe. However, in many cases, a lender will want to get an idea of your needs and overall circumstances.
Here’s what a bridging lender may consider when applying for short term finance:
Security
Bridging loans are usually secured against property, so lenders will assess the value and marketability of the property offered as security.
Exit Strategy
You must have a clear plan to repay the loan within the agreed-upon term. This often involves the sale of property or refinancing to a mortgage.
Creditworthiness
Lenders will typically take your credit history and overall financial situation into account, however, this is often less stringent than with a mortgage application.
Purpose
You’ll need to provide a clear and valid reason for needing the bridging loan, such as purchasing a new property or funding home renovations.
Income
Depending on the circumstances, some lenders may require evidence of income.
Legal Requirements
You’ll need to meet the legal requirements, such as being of legal age, and providing necessary documentation such as identification, proof of address, and details of the property involved.
Watch our video below - Bridging Loans Explained: Costs, Timescales, Examples, & How To Get One
Explore some of the short term finance deals we've facilitated below
What Are The Advantages of Bridging Finance?
Quick Access to Funds
Bridging loans provide fast financing, allowing you to act quickly in time-sensitive situations, such as buying a property at auction or breaking a mortgage chain.
Flexibility
These loans can be used for various purposes, including property purchases, renovations, business opportunities, or debt consolidation.
Short-Term Solution
Bridging loans are designed for short-term use, making them suitable for covering temporary gaps in funding.
Interest-Only Payments
Often, bridging loans offer interest-only payment options during the term, reducing immediate financial pressure until the principal is repaid.
Less Stringent Requirements
Compared to mortgages, bridging loans can have more lenient lending criteria, making them accessible to borrowers who might not qualify for other types of financing.
What Should You Consider Before Using Bridging Finance?
Higher Interest Rates
Bridging loans typically have higher interest rates than long term finance, increasing your overall cost of borrowing.
Fees and Charges
These loans often include additional fees such as arrangement fees, exit fees, and valuation fees, which can add to the overall cost.
Short Repayment Period
The short-term nature of bridging loans means that you’ll typically need to repay the loan within a year. This can be challenging if the sale of the existing property or securing long-term financing takes longer than expected.
Risk of Repossession
Since residential bridging loans are usually secured against property, failure to repay the loan on time can result in the lender repossessing the property.
Financial Pressure
The higher cost and short repayment period can create financial pressure, especially if the borrower encounters delays or difficulties in selling the existing property or securing additional financing.
Want to know whether a bridging loan is right for you? Speak to a financial adviser below.
What Would You Use Short Term Finance For?
A bridging loan is primarily used to provide immediate funding when timing is crucial and traditional financing options are either unfeasible or not easily accessible.
Common uses include purchasing a new property before the sale of an existing home is finalised. This can help in the case where you come across a suitable property before finding a seller for your current home and you don’t want to lose out to another buyers.
Bridging loans can also be advantageous if you find a property you want to add to your investment portfolio and want to act quickly.
Short term loans are also employed for property renovation or development projects, providing capital to complete improvements before refinancing or selling a property.
Additionally, they can be used to cover short-term cash flow needs in businesses, such as meeting urgent expenses or seizing time-sensitive opportunities.
This flexibility makes bridging loans an attractive option for individuals and businesses needing quick, short-term financial solutions.
Is Short Term Property Finance Expensive?
Yes, bridging loans can be relatively expensive compared to traditional mortgage loans or other forms of long-term financing. They typically come with higher interest rates and additional fees, which contribute to their overall cost.
Interest rates for bridging loans can range significantly depending on the lender, your credit history, and the specifics of the loan, but they are generally higher than mortgages.
In addition to interest, you may also have to pay arrangement fees, valuation fees, and legal fees, which can further add to the expense of the loan.
Despite being costly, bridging loans offer flexibility and speed that may justify their higher cost in situations where quick access to funds is crucial. As with any financial product, it's essential to carefully consider the total cost and terms of the loan before proceeding.
What Are The Shortest Terms You Can Get on a Bridging Loan?
Bridging loan terms can be as brief as one month. These ultra-short-term loans are designed to provide immediate, temporary financing for urgent needs, such as securing a property purchase, covering short-term cash flow gaps, or completing a quick renovation project.
The exact duration can vary depending on the lender and your specific situation, but typically, bridging loans are flexible and can be tailored to certain timeline, with terms ranging from one month to a year or longer.
What Types of Bridging Loans Are Available?
In bridging finance, there are two main types: regulated bridging loans and unregulated bridging loans.
You'll need a regulated bridging loan if you're purchasing a property for personal or family use. For commercial properties or non-residential purposes, like investments, an unregulated bridging loan (commercial bridge loan) is the right choice. If your plan involves selling the property to repay the loan rather than refinancing or selling another property, you'd typically opt for an unregulated bridge loan.
Regulated bridging loans are governed by the Financial Conduct Authority (FCA) and usually have shorter terms, typically up to 12 months. In contrast, unregulated bridging loans offer more flexibility with terms that can extend up to 36 months, catering to various financial strategies.
If you're uncertain about which option suits your situation best, it's wise to consult with a qualified adviser to determine the most appropriate bridging loan for your needs.
How to Apply for Short Term Property Finance
If you're looking to access short term property finance, you may need the help of a specialist finance broker. An experienced broker can use their network of lenders and market expertise to find you the best deal on the market.
At Clifton Private Finance, we have an award-winning team of short-term finance brokers who can guide you through the process. We can offer comprehensive advice on your options and will help you find the most cost-effective solution.
If you want to get a clear idea of your options, call us, and an adviser will be able to discuss your situation in detail.
Call us on 0117 205 4827 or book a free consultation below.
FAQs
Yes, a valuation is typically required for a bridging loan in the UK. Since bridging loans are often secured against a property or other valuable assets, lenders will want to assess the market value of the property being used as security. This helps the lender determine how much deposit they want you to provide based on the value and condition of the property. You can borrow up to £25m with bridging finance, but it’s typically capped at about 80% of the value of the property you’re using as security. It's important to note that different lenders have varying policies and criteria regarding the maximum loan amounts they offer for bridging finance. Some lenders have a maximum limit of over £1 million, while others may specialize in smaller loan amounts. Additionally, the terms and conditions of the loan, including interest rates and fees, should also be taken into consideration when determining the overall affordability of the bridging loan. Yes, you typically need a 20-40% deposit for a bridging loan. It can be possible to get a bridging loan without a deposit (a 100% bridging loan), but you’ll need other assets in the background to secure the loan against, and more stringent criteria and higher costs could apply. Yes, it is possible to get a 100% bridging loan (also known as a 100% LTV bridging loan), but it is rare. This means that you won’t need to put down a deposit and can borrow the full value of your property. However, the criteria for these loans can be hard to meet, and you’ll need to provide additional assets as security for your loan. Interest rates and fees can also be higher to compensate. While using bridging finance doesn’t technically make you a cash-buyer, it can allow you to act like one. Mortgages take months to process, often leading to an ‘onward chain’ where all parties involved need to wait for funds to be transferred. Bridging finance can usually be accessed a lot quicker than mortgages so you can bypass the onward chain, giving you an advantage over other buyers and being attractive to sellers. Bridging loans typically have a term of 12 months, but some lenders are willing to stretch their terms to 18 months, or even 2 –3 years depending on the case. Terms longer than 2 years will usually only be considered for specific cases. Yes, you can use a bridging loan to pay Stamp Duty. This amount could be covered by a bridging loan, providing you have a way to repay the additional borrowing amount to your lender. Yes, bridging loans are safe when they’re used in the right circumstances with a solid repayment strategy. However, we recommend speaking to a qualified advisor, like our brokers at Clifton Private Finance, before you take out a product. The main factors to consider with bridging finance are that the full loan amount will usually need to be repaid within a year, and like a mortgage, it is secured against a property as collateral. This means that in the case that you aren’t able to repay your bridging loan, your property would be at risk of repossession. But with a watertight exit strategy, bridging finance can be an efficient way to secure property quickly. Bridging loans are designed to be short-term so there’s no maximum age limit when applying for a bridging loan. This does depend on the lender, as some bridging lenders do have an upper age limit, but there are lenders on the market who offer bridging loans for borrowers aged 70 and over. Bridging loan interest rates usually range between 0.45% - 2% per month, depending on the case and the market rate. Unlike mortgage interest rates, bridging loan interest is calculated monthly instead of yearly. This is because bridging loans are short-term and, in many cases, repaid within a year. Bridging loans can be arranged without early repayment penalties, so interest is calculated monthly to ensure you only pay interest on the months you have the loan for. Unfortunately, mainstream banks in the UK don’t offer bridging loans. This means that if you’re looking for a bridging loan, you won’t be able to get one using a lender you’d find on the high street. There are a variety of specialist lenders that offer bridging loans, but because these lenders are smaller and more niche, you may need a bridging broker to access them. Banks typically charge two main fees when taking out a bridging loan – arrangement fees and interest. But there are other costs to consider such as valuation fees, broker fees and administration fees. Costs can vary from lender to lender, and will also depend on what your bridging loan is for (e.g., residential or commercial purposes.) Arrangement fees are what the lender charges you to take out the loan and can range between 1.5 - 3% of your overall loan. Bridging loan interest, on the other hand, is calculated monthly. This can catch borrowers out who may be expecting an Annual Percentage Rate (APR) like with a mortgage. Yes, you can convert a bridging loan to a mortgage through refinancing, and it is common among borrowers who use bridging finance to buy residential properties. However, whether or not you’ll be able to refinance to a mortgage is dependent on your financial circumstances, the lender, and the property you’re planning to buy. It’s important to be sure that refinancing is a viable repayment option before you take out a bridging loan on a residential property. Yes, bridging loans are typically more expensive than mortgages. Bridging loan interest rates can be much higher than a mortgage, and are calculated and displayed as monthly rates instead of the usual annual percentage rate (APR) that you’ll see on a mortgage. However, bridging loans are a short-term solution, and you’ll only pay interest on the months you’ve borrowed money for – and you can repay early without any charges (for most loans). There are many circumstances where bridging loans are an affordable option and a means to an end - for borrowers that need to finance a property purchase quickly, it may be the only option available. The two most common ways to pay a bridging loan are to sell a property or refinance to a mortgage. You may also need to ‘service’ the loan through the term, which means paying the interest monthly. However, you can opt to ‘roll up’ your bridging interest to be repaid at the end along with the capital. There are also other ways to repay a bridging loan, such as selling a business or even using money from an inheritance. The method in which you pay your bridging loan can be flexible, just as long as it is clear in your application that you have a surefire way to repay your loan when the terms are up. In most cases, a bridging loan will require a minimum deposit of 25%. However, the minimum can vary depending on the lender and the specific circumstances of the loan itself. Generally, bridging loans are secured against a property or other valuable assets, and the deposit required is often expressed as a percentage of the property's value, known as the loan-to-value ratio. In some cases, 0% deposit bridging loans are an option, but only if you have other property or assets in the background to provide additional security. No, typically, you’ll repay a bridging loan in one chunk at the end of the loan term. Bridging loans are a form of short-term finance and will usually need to be repaid within 12 months, but there can be room for flexibility. In some cases, borrowers may be required to make monthly interest payments. This means that each month, you would pay the interest accrued on the loan amount while the principal amount remains outstanding until the end of the loan term. But usually, the interest is "rolled up" or added to the loan balance and paid with the rest of the loan at the end of the term. This option can help protect your cashflow so you can spend it on moving costs or refurbishments, for example. Bridging loans can be arranged in as little as 7 working days. However, it depends on the complexity of the bridge loan and your specific circumstances. It may also be more expensive for you to rush an urgent application through – but not impossible. Bridging loans are a popular option for borrowers who are under time constraints, such as buying a property at auction or breaking a chain. The key factors lenders tend to consider are: Security - Bridging finance is usually secured against property or other valuable assets. Lenders will assess the value and marketability of your security. Exit Strategy - Lenders will want to understand how you plan to repay your bridging loan. In most cases, this is selling your old property, selling the new property (flipping), or refinancing with a long-term mortgage. Loan-to-Value (LTV) Ratio - Lenders consider the loan amount compared to the value of the property being used as security as a percentage. The LTV ratio can vary, but most lenders will have a maximum of 60-80% LTV. Remember, the criteria for obtaining bridging finance in the UK can vary depending on the lender and your circumstances.
Do you need a valuation for a bridging loan?
How much can you borrow with bridging finance?
Do you need a deposit for a bridging loan?
Can I get 100% bridging finance?
Does a bridging loan make you a cash buyer?
What is the longest bridging loan term?
Can I use a bridging loan to pay stamp duty?
Are bridging loans safe?
Can an 80 year old get a bridging loan?
What is the monthly interest rate on a bridging loan?
Do banks still do bridging loans?
How much do banks charge for bridging loans?
Can you turn a bridging loan into a mortgage?
Is a bridging loan more expensive than a mortgage?
How are bridging loans paid?
What is the minimum deposit for a bridging loan?
Do you pay monthly payments on a bridging loan?
How long does it take for a bridging loan to come through?
What is the criteria for bridging finance?
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