Bridging Loan Solicitors

A bridge loan is a short-term financing solution for instances when you don’t have immediate access to funds. Provided you meet the lender’s criteria, it allows you to bridge the gap and borrow the amount you need.

Because of the nature of this product, and the high risk involved for the lender, bridging loan rates will usually be higher, and you may also need to pay for one-off product fees.

Generally, you will need a good credit score, since personal income is not a factor that weighs in. The most important thing is to have a good exit strategy, which is the certainty that you will get access to funds in the future and therefore will be able to pay off the debt.

Bridging loans can be associated with mortgages, but they are different products. While a bridge loan is similar to a short-term mortgage, its differences are significant.

Generally, there is no set limit on how much you can borrow with a bridge loan. Lenders will make a decision on a case-by-case basis.

As long as you can convince them that you will definitely get access to your funds and thus be able to repay off the debt, you will be able to borrow as much as you need.

There are a few high street banks which offer bridging finance, such as Lloyds Bank. However, in most cases, this product is offered by specialist lenders.

The difference between mainstream banks and specialist lenders is their flexibility. While banks have a more rigorous list of requirements, specialist finance brokers usually target borrowers who do not meet those requirements, but still have the ability to repay a loan. Getting a regular mortgage with a high-street bank is directly proportional with your personal income.

However, for instances where one would need a bridge loan, for example, that becomes irrelevant. A lender will be interested in the market value of the property instead and your ability to access the capital.

Bridge loans posses a number of risks, for both the lender and the borrower. From a lender's perspective, they are granting you a large amount of money under the premises that you will gain access to a cash flow in the future. Should this be the case, you will repay the debt and pay a high interest, therefore making them profit. If you fail, they suffer financial losses.

A bridge loan is secured. This means that the lender will want to make sure they can recover their investment, and will secure it against an asset, usually your property. Should you fail to repay your debt, the lender can repossess your property and recover their loss.

Because of the possible risks involved, as well as the expensive nature of this loan, specialist lenders will ask you to get Independent Legal Advice. This will ensure that you understand the terms so you can make an informed decision, with no nasty surprises.