Bridging.
A how to guide.
Intermediaries only.
What is Bridging?
A short-term finance solution designed to allow your client to purchase or remortgage a property when long-term finance isn’t an option.
When to use bridging.
Bridging finance can be used for any legal purpose. Typical examples of short-term finance include:
Buying a new property before selling an existing one
Purchasing where quick completion is required e.g. at auction
Refurbishing property
Raising funding quickly, e.g. for business or personal use
Change of use e.g. HMOs/multi-unit conversions
Home improvements e.g. EPC, extensions, barn/garage/ loft conversions
Myth-busting: “bridging is expensive”.
In an increased interest rate environment, term lending has become more expensive, while bridging rates have stayed relatively static and are now more competitive than ever.
Whilst a typical bridging loan term is offered over 12-18 months, we calculate interest daily and the loan can be redeemed after just 1 month. bridging can be great value for money by delivering a solution that traditional term lenders can’t.
Serviced interest vs rolled up interest.
Serviced interest is when the interest is paid monthly by the borrower to the lender similar to a standard mortgage or loan. Rolled up interest is when the monthly interest payment is not paid monthly by the client, but is instead added to the original loan balance and paid when redeemed.
Calculator.
Try our easy-to-use Bridging calculator to compare different products, terms and produce illustrations.
Regulated or non-regulated?
Regulated
In simple terms, a regulated mortgage contract is a loan secured by a charge over a residential property which has been lived in by the applicant or a family member.
The purpose of the loan is not wholly or predominantly for the purposes of a business carried on, or intended to be carried on, by you.
Non-Regulated
The loan is unregulated if it’s secured against a property that you have never, and will never, reside in. i.e. purchasing a buy to let property to retain or develop.
Precise bridging products.
Standard Bridging
No work to the property required, e.g chain breaks.
Light Refurbishment
The property needs some form of material improvement, without changing the footprint.
Heavy Refurbishment
The property needs some major works, is a self-build, or requires extensions or major structural changes.
For further information please see our product guide.
Refurbishment Buy to Let
Refurbishment buy to let offers your customer the flexibility of bridging finance to fund a refurbishment project as well as providing the surety of an exit onto a buy to let mortgage at the time of application. The refurbishment buy to let product has two stages:
Stage 1: A bridging loan that will need to be repaid at the end of the term of the bridging loan when the refurbishment works have been completed.
Steps
➀ Initial assessment
We’ll assess the case, issue an illustration and let you know of any extra information we need.
➁ Valuation
We’ll ask the valuer for two valuation figures. First will be for the property in its current condition and the second will be based on post-refurbishment, taking into account your submitted schedule of works.
➂ Offers
We’ll issue two offers; one for the bridging loan based on the pre-works valuation, and one for a term buy to let mortgage to repay the bridge loan, based on the post-works valuation. Having both offers upfront gives the customer the surety of an exit providing there’s no change in circumstances and the property meets the expected postworks valuation.
Stage 2: A buy to let loan to be used to repay the bridging loan including any additional funds that your customer wished to borrow at that time.
➃
Bridge completes
The customer completes works, as per schedule and notifies us.
➄ Reinspection
We instruct the valuer to complete the reinspection and confirm the increased valuation figure and rental income.
➅ Completion
We release funds on the buy to let mortgage at the enhanced property value.
Specialist Bridging
Large blocks, Multi Unit Freehold Blocks, multiple properties, Purpose Built Student Accommodation.
Semi-Commercial Bridging
Purchasing or refinancing a semi-commercial property. Available through our sister brand InterBay.
Commercial Bridging
Purchasing or refinancing a commercial property. Available through our sister brand InterBay.
Developer Exit
Property developers looking to fund projects from practical completion to sale.
Bridging Conveyancing options.
Joint representation – this is via our preferred solicitor conveyancing panel. These solicitors are selected by us as they understand the speed and service requirements for bridging finance transactions. They will act on behalf of the client and us, potentially proving a more cost effective and efficient process.
Separate legal representation – We understand that your client may wish to select a solicitor not on our panel. Please be aware that if this is the case the client will be liable for the cost of their own solicitor and the cost of a preferred panel solicitor who will be appointed to represent Precise.
For full details of our panel solicitors and process can be found on the conveyancing page on our website.
Direct or packager?
You may deal with bridging regularly and want to navigate the research/application/processing journey yourself. But if you’re new to the process or simply need a little extra support, you can refer the case to one of our panel packagers who’ll take care of everything.
Hello being in the know on the go.
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For more information on Precise Bridging loans, visit precisemortgages.co.uk or call 0800 116 4385.
We can provide literature in large print, Braille and audio. Please let us know if you require an alternative format.
Precise Mortgages is a trading name of Charter Court Financial Services Limited which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority (Financial Services Register Firm Reference Number 494549). Registered in England and Wales with company number 06749498. Registered office: 2 Charter Court, Broadlands, Wolverhampton WV10 6TD.