Closed Bridging Loans are often a financing strategy used by property owners or residential investors to fund the purchase or renovation of a property in which they wish to convert and subsequently sell. This financing comes in the form of a short term loan that is secured on a property by the way of the first charge mortgage.
For Closed Bridging Loans, the exit strategy, or plan for how the loan will be repaid, must be guaranteed by the remortgage or sale of the property by the borrower. In order to understand more about Closed Bridging Loans, some of the most frequently asked questions will be answered.
What Geographical Areas Qualify for Closed Bridging Loans?
In order to qualify for a Closed Bridging Loan, the borrower must be purchasing a property within the lender’s covered geographical area. These areas generally include England, Scotland, and Wales. Before applying for a Closed Bridging Loan, it is important to consult with a knowledgeable finance broker to ensure the area the property is located in is covered.
For example, some lenders are currently not covering the area of Northern Ireland, so a Closed Bridging Loan will not qualify in that area.
How Much can be Borrowed and What Security is Needed?
Many Closed Bridging Loans start at a minimum borrowing amount of £26,000 – in order to receive the most accurate information, please call EuroGuide to discuss your borrowing needs. Most lenders will offer financing with the property as the security as long as the property is being purchased with the intention of it then being sold by a professional real estate agent.
Lenders will not offer Closed Bridging Loans to borrowers who intend to make the purchased property their primary residence.
What is the Most Loan to Value seen on Closed Bridging Loans?
The maximum Loan to Value, or LTV, that a borrower can see on their loan is dependent on the property taken as security. Generally, 80 percent of the property’s purchase price is granted, or 70 percent OMV. Whichever percentage is lower or higher will be granted, depending of the borrower has additional security.
If you would like to discuss your property’s LTV rate, please contact EuroGuide and one of our knowledgeable representatives will let you know what borrowing options are available for your situation.
What are the Repayment Terms and How Do I Apply for a Closed Bridging Loan?
Repayment terms for Closed Bridging Loans will vary based on each borrower’s unique lending situation and the amount of funding requested. General terms for this type of financing can range from one day to up to 12 months. To apply for a Closed Bridging Loan, you will need to fill out and complete our short application form which you will find further down this page.
Before doing so, we suggest you contact EuroGuide to discuss the project and ensure that this type of finance is the right solution for you.
Do Borrowers Need to Prove their Current Income?
Closed Bridging Loans are granted based on the value of the property being used as security and not the review of the borrower’s income. Although a borrower’s income holds no weight in this decision, many lenders like to see the applicant’s Experian credit file and score card in order to determine what type of borrower they are.
Having a good credit score and proof of timely repayments may assist a borrowed in securing lower interest rates and more flexible repayment terms with some lenders.
Do Borrowers Need their Own Solicitor or Mortgage Broker?
It is recommended that all applicants and borrowers seek the professional assistance of an independent solicitor and/or mortgage broker before signing any type of legal document. These professionals should ideally specialise in the property area the borrower is working in. In order to speed up the application and consideration process, we suggest selecting a solicitor and mortgage broker from our list of partner professionals.
If you would like more information on this, please give EuroGuide a call on 0292 108 0713
How Long Does it take to Arrange Closed Bridging Loans and What Costs are Charged?
Closed Bridging Loans can be arranged in as little as 72 hours, provided the necessary information is readily available and the solicitor is happy with the title and quickly replies to the lender’s questions. Considering that every lending situation is unique, there are no standards of costs associated with their arrangement – some of the most common upfront fees include a valuation fee, arrangement fee, exit fee, monthly interest and whatever fees your solicitor and mortgage broker charge for their services.
How Do Borrowers find out More Information?
Since every project is unique, it is important to consult with a professional in order to determine if a Closed Bridging Loan is the right choice. If you would like to discuss the details of your project or have additional questions about Closed Bridging Loans, we invite you to contact our knowledgeable finance team at EuroGuide.
Our professionals will be able to answer all of your questions and help determine what type of funding is best suited to meet all of your project needs.