Bridging Finance

At face value bridging finance is far more expensive than a mortgage, certainly in terms of interest rates and fees. However, if you factor in the cost of arranging two mortgages, two sets of arrangement fees and early repayment charges then bridging finance could work out cheaper.

We have attended several auctions and spoken to as many specialist bridging financiers as we can to find a company we are comfortable to recommend to our clients. The following is a synopsis of the terms that we have agreed.

• Borrow up to 80% of bid price or 70% of open market value whichever is lower
• Interest rate of 1.25% per month
• The term of the loan is agreed up front (typically six months) and the interest is debited from the advance. If the advance is repaid early interest paid up front will be credited back. Interest is calculated daily. (All other bridging financiers that we've talked to charge for a full month even if the funds are repaid just one day late, e.g. if you were to redeem after 2 months and 1 day most companies would charge 3 months interest. This company would only charge interest for 2 months and 1 day. This is one of their unique selling points)
• The minimum bridging term is 1 month.
• There are no exit fees or notice periods on redemption. Watch out for these with other companies, some may charge an extra 1.5% to 2% fees on redemption!
• Our recommended bridging company charges an arrangement fee of 2%, legal fees of £500+ VAT and a valuation fee. They insist on using their own valuers (re-types are not allowed)
• Properties do not have to be habitable, however, if they require substantial redevelopment including change of planning use or major structural work the percentage they are prepared to lend may be reduced
• Funds are provided on a non status basis and can, therefore, be advanced within the completion timescales set by the auction houses very comfortably.

Contact us today and we will be delighted to put you in touch with our recommended supplier for more information.