Welcome to Fox Davidson, we are an award-winning bridging loan broker based in the South of the UK. We have offices in Bath, Bristol and London. Working with Fox Davidson will give you access to the whole of the UK bridging loan market. We secure fast bridging loans on residential and commercial property and land.
What is a Bridging Loan?
A Bridging Loan is a short term loan secured against property or land. Bridging loan can be secured in a s little as 48 hours and is loaned for a typical term of 12 months. As we will discover, bridging loans can be used for many purposes.
A bridging loan is commonly used when a property is not mortgageable via the high street banks, an auction property is a good example of when we will use this type of short term finance. Bridging loans are used to fund property or land for a short period of time until it is sold hence the term ‘bridge’.
Bridging finance can be used for a number of reasons including
- Auction properties
- Renovation projects
- Chain Breaker – Allowing you to finance a purchase without selling
- Short lease extensions
- Payment of a tax bill
Who Can Take Out a Bridging Loan?
Individuals – Each case is assessed on its own merits so even a First time buyer Bridging loan is possible.
Ltd company – The finance can be secured in the name of a Ltd company.
Pension – A pension such as a SIPP.
Trusts – Trust with the ability to borrow.
What are the typical terms for Bridging Finance?
As a leading Independent Bridging Finance broker we can secure finance on exclusive terms from our funding partners.
Finance can be drawn down day 1 and repaid day 2 if necessary. The term of a bridging finance will depend on the situation and needs of our client. If the funds are being used to fund a property development, then we would look at the planned schedule for the build and add in some contingency and the loan would be granted for that period of time. The norm is for a term of 1 to 24 months.
Bridging Loan Amounts and the Loan to Value
Fox Davidson are accredited members of the Nationals Association of Commercial Finance for Brokers (NACFB). We arrange short term finance solutions for clients wishing to borrow £250,000 to £100 Million. Above £500,00o we can arrange finance without charging a broker fee.
The loan to value of a bridging loan will depend on the situation:
- Residential – If you are looking to break a chain on your residential sale and purchase and need some bridging finance to be able to buy the new property until you sale the existing one then Bridging finance solutions of up to 75% are possible. With additional security this can be taken up to a 100%.
- Commercial – Loan to values on commercial bridging finance are increasing and like residential with additional security we can secure up to 100% loan to value. .
Bridging Loan Rates
Historically Bridging loans were offered by a few lenders in a very unregulated environment. These lenders charged around 1.5% to 2% per month with large lender fees payable on acceptance and in some cases fees were payable on the exit of the loan.
Thankfully the market has now become more competitive and challenger banks and new entrants to the market have reduced interest rates and the fees that are charged. Average Bridging loan rates have fallen to around 0.5%pm with lower fees on acceptance and many bridging loan lenders will lend with no exit fees for redeeming the loan.
Rates will depend on the security, the borrower, the term, the loan amount required and the exit. If everything is in your favour, then rates as low as around 0.4% pm are possible.
For the right client and in the right situation we are able to secure chain breaking finance on residential property with no early repayment charges with rates as low as 2% per annum and up to 90% loan to value.
For Buy to let short term funding we can secure up to 80% on rates of around 3% with under £500 in set up costs.
Bridging finance does not have to be expensive and using a fully regulated broker such as Fox Davidson allows clients to get a whole of market perspective which more often than not results in a market leading bridging finance terms.
Bridge to let HMO refurbishment
Our clients required a loan of 70% on a tired 3 bedroom property in Windmill Hill, Bristol. Their plan was to spend £30,000 renovating the property and adding a 4th bedroom before refinancing on to an HMO buy to let mortgage.
Fox Davidson placed the lending with one lender that took care of the bridging finance and also the buy to let exit. There could be no issues with the financing as the lender agreed all terms upfront. The initial valuation took care of the current value and the after works value plus the expected rental amount.
The client completed the works within 3 months and the post works valuation came back as expected and they exited on to a 3 year fixed rate buy to let product and were able to borrow 75% of the post works value, thus taking back some of the money spent on the works to the property.
BVI Ltd company
Our client was a BVI company held in trust to a QROPS. The property was a terraced London property which had been reduced to a shell. The existing lender was calling in the loan. The property was valued at £12m. Our clients needed a loan of £8m to help fund a complete the refurbishment before selling the property once works were complete.
Fox Davidson secured finance at 1.1% per month for a term of 9 months. The client went on to sell the property for £13m 6 months later to an investor who took on the uncompleted refurbishment project.
Residential Chain Breaker
Existing clients approached us needing to move home quicker than they could sell.
Our clients had a property worth £420,000 and had not yet found a buyer for their property. They had, however, found their new dream home which they wished to purchase for £825,000 and before they sold their existing home. They had no mortgage on the existing property.
Our team secured terms on the existing property at 3.2% variable rate per annum with no set up fees. We raised £300,000 on their existing property and £400,000 on the new property at a rate of 2.1% again with little set up costs and with complete flexibility to pay down the mortgage without penalty. Both mortgages were loaned on an interest only basis to keep the monthly commitments low.
On sale of the existing home the clients repaid the £300,000 loan and reduced the lending on the new property.
Contact us today to find out more about bridging loans and to obtain a same day lending decision.