Bridging loans are a great option for individuals who are looking for quick funding for purchases or business ventures. This interim finance solution provides borrowers with immediate capital in the form of a short term loan, which is interest only and can be secured by the property being purchased or a currently owned property.
Jubilee is available to provide clients with a variety of quick bridging loan options that can meet any and all funding requirements and quickly assist with any purchasing situation.
How to Apply for a Bridging Loan
To begin the application process, simply contact Jubilee with your financing inquiry. It is important to have crucial information available when you call, including name, address, security property’s address as well as the property’s purchase price, appraised value, solicitor’s information and how much funding is being requested along with your preferred repayment method.
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When this information is available during the initial call with Jubilee, it can help ensure a quick and efficient loan application process. When the initial application has been completed, we will work quickly to help complete the financing request.
An initial assessment of the application will be available in as little as two hours and a Decision in Principle, or DIP, is usually made available to the applicant within 24 hours of submitting the application. Once the borrower has reviewed and agreed to the terms of the loan, a certified copy of the borrower’s passport and recent utility bill will need to be presented.
Before the application can be completed, the lender will also require the applicant to pay any initial fees or charges – these will be outlined in the Key Facts Illustration or lending proposal. Once these fees have been paid in full, the application will be moved into completion.
Once in completion, borrowers can usually expect a disbursement of their funds within 7 to 14 business days. If financing is being used for a refurbishment, site plans, planning consent, and budget costs will also be required before completion.
Security Needed and Typical Terms of a Bridging Loan
Freehold or long leasehold properties can be used as security against a bridging loan by the first charge over the property. For companies or businesses, lenders may also require personal or debenture guarantees. Bridging loan terms will vary depending on the unique situation that surrounds the loan.
In general, bridging loan repayment terms range from a 30 to a 90 day period but can be extended is the financing is used for a development project – this extension can have terms of up to 18 months, which will allow the borrower to complete the project and arrange additional financing or sale of the property.
Upfront Fees Incurred with Bridging Loans
There are some upfront or initial fees associated with obtaining bridging finance. Since lenders incur some costs when processing an application and arrange a loan, they look to ensure these costs are covered by the applicant in the form of initial fees.
These charges are usually outlined as application fees, valuation costs, or legal fees. Jubilee provides clients with quotes for all applications that will also detail these costs and make sure applicants understand how the charges are calculated.
Loan Amounts Available through Bridging Finance
The amount of a bridging loan will vary from one application to the next and is based on the calculation of a number of different criteria. Financing amounts can range from £25,000 to over £50 million depending on the valuation of the security being offered.
Bridging loans generally reflect between 65 percent and 75 percent of the security property’s value. Project details will also play a role in the amount of the loan – purchase, development and refinance projects will all carry different values to lenders.
Rates and Charges Associated with Bridging Loans
Rates and charges will apply to all products even larger bridging loans, but the amount will be dependent on specific details of the proposed project and some other factors. The type of property, its location and current value, the loan to value or LTV of the property, and the borrowing terms will all play a role in deciding the rates and charges.
Jubilee will commission a number of different lenders with the proposed application and project to ensure that clients are getting the best possible financing deal to meet their needs.
Bridging Loan Repayment Penalties
Bridging loan lenders usually specify a 30 day repayment period for this type of loan. Generally, if a full repayment of the loan is made after this minimum term expires, there are no penalties incurred by the borrower. Make sure to reference the offer documentation carefully when considering quick repayment – any early repayment penalties and the minimum terms information will be found in the loan detail documentation that will be provided to the client by us and explained before completion.
Quick Bridging Loans Offer Interest Payment Options
Lenders offer the option to add interest payments to the total amount of the bridging loan. This is usually presented in one of two ways – lenders will either offer an interest roll-up option or offer to subtract the interest payments from the loan amount being offered.
The value of the loan requested and details of the proposed project will determine which, if any, of these offers are presented. This information will also be outlined in the loan detail documentation and explained by Jubilee.