Bridging Loans For Fast Property Purchases
Bridging loans offer a fast way to purchase property, helping the individual to become a cash buyer and complete a property transaction in weeks, rather than months.
KP Finance can help facilitate bridging loans for property purchases, renovation work, breaking chains, auction purchases and more – with flexible terms to suit your needs.
We understand that every project is different – and bridging finance gives you the flexibility to structure the terms according to your requirements.
Our bridging loans start from £50,000 to £10 million+, with repayment periods of 3-24 months, with a clear exit strategy required.
Call the number below to speak to the KP Finance team and we can provide initial terms within 24 hours – and provide useful feedback by drawing on more than 30 years of combined property experience.
Call +44 203 488 1128
Samuel Kalms, Director
What is a Bridging Loan?
A bridging loan is a short-term financing solution that helps bridge the gap between property transactions.
In a competitive property market where purchases are tied up in long chains and mortgages can be tough to get, bridging loans provide a short term solution so that you can purchase the property as a cash buyer.
Popular amongst property developers and investors, bridging is most commonly used to buy property, carry out renovations or buy properties at an auction. Developers will usually look to purchase the property, increase its value and then exit by reselling it or renting it out to tenants.
Whether it is residential, commercial or investment, the speed of bridging loans is what makes them most attractive, with approval and completion within a few weeks and the loan term lasting between 3 to 24 months.
How Does a Bridging Loan Work?
A bridging loan essentially bridges the gap between the purchase and sale of a property. This type of short term finance is a practical and effective way for property developers to complete property deals quickly and expand their portfolios.
Gaining huge popularity in the last decade, bridging has become a viable solution and alternative to mainstream financing from high street banks, which many find come with strict eligibility requirements.
With maximum loan-to-values of 75%, this means that developers can continue to grow their portfolios whilst putting in limited amounts of cash themselves, which might be tied up elsewhere.
What Are The Terms You Offer?
| Term | Details |
|---|---|
| Loan Term | 3-24 months |
| Loan Amount | £50,000 – £10M+ |
| LTV | Up to 75% |
| Interest Rates | From 0.70-1.20% per month |
| Repayment Type | Retained, Rolled-up or Serviced |
| Security | First charge |
How To Apply For a Bridging Loan Step-By-Step
- Make an enquiry
- Get an offer
- Get a property valuation
- Complete with solicitors
- Your funds are released
When a borrower applies, the property or asset they apply with becomes security and the lender will evaluate the risk and offer terms based on the customer’s experience, financial background, the value and potential of the property.
All property purchases will be subject to a valuation and legal review and once fully checked over, the loan funds are released in one lump sum.
For lenders, it is imperative that the borrower has a clear exit strategy for the end of the loan term – and can demonstrate well-thought out plans and costs for the purchase and any necessary building work.
The loan is commonly repaid via a re-sale of the property, refinancing under new terms or alternative funding, such as moving the loan to a buy-to-let mortgage.
What Are Bridging Loans Used For?
- Property purchases
- Investment property purchases
- Residential property
- Commercial property
- Buying property at an auction
- Renovations and refurbishments
- Chain breaks in property sales
- Land acquisition
What Are The Benefits of Bridging Loans?
Quick Access To Funds – Bridging is designed to help property transactions complete quickly. The product is offered less by mainstream banks, but rather private investors or firms who are able to make fast decisions and allow loans to be completed in 1 to 4 weeks. By making you a cash buyer, you are able to break traditional property chains and purchase a property as quickly as possible.
Flexible Repayment Terms – Bridging loan terms can be structured entirely to the needs of the customer and their project. This includes the loan-to-value ratio, the loan duration and repayment terms to ensure that there is healthy cash flow during any building works and can be exited smoothly.
Mainstream banks might be stricter with certain types of properties and have fixed terms for 1,2 or 5 years, but bridging lenders can take a more personal view on each customer and assess their eligibility on a case-by-case basis.
No Early Repayment Penalties – Most bridging lenders do not charge early repayment fees if you are able to exit and repay your loan in full early.
What Are The Different Types of Bridging Loans?
Open Bridging Loan – This is where the loan has no fixed repayment date, likely because the property is being renovated and might be sold to another person or because it might be rented out to tenants – but there is no exact completion or end date confirmed just yet.
As the owner of the property, they might be looking to re-sell the property but wait until they get the best price possible. Whilst it remains open, the maximum loan duration is 24 months so plans will need to be made to repay in full, extend or refinance at this point.
Closed Bridging Loan – In this case, there are fixed terms and a clear repayment date because you know exactly when you are exiting the loan arrangement. This could be through reselling the property, refinancing or converting the bridging loan into a buy-to-let. When buying at an auction, you may have very clear dates and times for completion.
First Charge Bridging Loan – As first charge, this means that it takes priority as the first payment to be collected from the property each month – and there are no other mortgages or financial products that take priority for this specific property. This is the most common scenario for a bridging loan.
Second Charge Bridging Loan – As the second charge loan, this is the second priority when it comes to repayments against a property. This is another short-term loan that is secured against the property that already has a primary first charge such as a mortgage on top of it. This is often used to add additional funds to the property, typically for carrying out renovations, whilst keeping the mortgage in place.
Bridging Loan Repayment Example
- Loan Amount: £1,000,000 (at 70% LTV, property value = £1,428,571)
- Term: 12 months, Interest Rate: 1% per month
- Repayment Type: Rolled-up (interest paid at the end)
- Total Interest: £10,000 × 12 = £120,000
- Total Repayment: £1,120,000 (loan + interest)
What is The Eligibility Criteria For a Bridging Loan With KP Finance?
- UK resident or company
- Property used as security
- Property is in UK, Scotland or Wales
- Clear exit strategy
- Financial records and statements
- Proof of funds/deposit
- Good credit history preferred but not essential
Why Should I Use KP Finance For Bridging Loans?
KP Finance can help you access the most competitive rates and flexible terms across the entire UK market.
We understand the needs of property developers and investors. When timing is of the essence, we are able to provide fast decisions, approvals and funding where needed.
Founded in 2016, our expert advisors have more than 30 years combined experience in the bridging sector and will offer market knowledge and established relationships with lenders to get you the best terms possible.
KP Finance is not simply an intermediary. We are involved in the entire transaction from initial enquiry to post completion and want to help you achieve your goals in the most practical and effective way.
Case Studies
Why Should I Use KP Finance For Bridging Loans?
KP Finance can help you access the most competitive rates and flexible terms across the entire UK market.
We understand the needs of property developers and investors. When timing is of the essence, we are able to provide fast decisions, approvals and funding where needed.
Founded in 2016, our expert advisors have more than 30 years combined experience in the bridging sector and will offer market knowledge and established relationships with lenders to get you the best terms possible.
KP Finance is not simply an intermediary. We are involved in the entire transaction from initial enquiry to post completion and want to help you achieve your goals in the most practical and effective way.
Frequently Asked Questions
How Much Does a Bridging Loan Cost?
Interest rates for bridging loans start from 0.40% per month over BOEBR (variable) or c.0.7%-1.25% fixed) and will vary depending on the level of risk and experience of the customer.
What Additional Fees Come With a Bridging Loan?
- Arrangement fees (typically 2%)
- Valuation fees
- Legal fees
- Exit fees (if applicable)
Which Parts of The UK Do You Cover?
We proudly offer bridging loans in Aberdeen, Birmingham, Brighton, Bristol, Cardiff, Cornwall, Durham, Edinburgh, Glasgow, London, Liverpool, Leeds, Leicester, Manchester, Nottingham, Newcastle, Sheffield, Southampton and many more.
Is My Bridging Loan Secured?
Yes, a bridging loan is secured against the enquired property or assets as a first legal charge.
How Soon Can I Receive a Decision in Principle?
KP Finance can typically provide an initial decision within 24 to 48 hours. We will require information about the property, its value and your plans for it. We may also request proof of funds for a deposit and recent financial records.
How Fast Does it Take To Obtain Funding?
Bridging loans can be funded as quickly as 5 days (should circumstances allow) but the full process from start to finish can typically be 3 to 4 weeks.
What Kind of Properties Can You Purchase Using Bridging Loans?
- Residential
- Commercial (all asset classes),
- Mixed-use
- Land purchases
- HMOs
- Hotels
- Warehouses
- Garages
- Student accommodation
- Leisure centres and gyms
- Offices
- Blocks of flats
How Do Repayments For Bridging Loans Work?
The interest and repayments for bridging loans are usually rolled up and paid on exit of the loan term. Other options exist such as monthly (serviced) or interest deducted upfront (retained).
Do You Run Credit Checks?
A bridging lender will sometimes run a credit check upon application. At KP Finance, we do not run credit checks ourselves, but undertake our own initial KYC/AML and PeP checks to ensure the suitability of our customers.
What Happens if I Cannot Repay My Bridging Loan?
If your loan reaches maturity and you are not in a position to make repayment, the lender may extend your terms and you will incur additional interest and possibly a late charge.
Other options include the opportunity to refinance under new terms, which may be less favourable than the original ones.
In the worst case scenario, the lender may repossess the property, taking it as security, in order to recover their losses.
At this point, we will assist you and help to negotiate the best possible outcome. We want to ensure that all parties are happy and from the start, we want to connect you to the best lender for your needs, not just the one that offers the cheapest rates.
