Do you need a valuation for a bridging loan? How about a valuation? Are interest rates fixed or variable and how do you repay it?
Our bridging loan FAQs answer all of the above and more to give you a better idea of what to expect.
The loans provided by the lenders we work with can only be secured against a physical property that cannot be moved. For example, a caravan or wooden lodge would not meet the lender’s criteria.
However, there are no specific restrictions on how you use the funds, as a bridging loan can be used for any legal purpose.
This depends on the type of application. For example, if it involves someone’s residential home or inherited property and the loan is not for business purposes, the loan should legally be regulated by the FCA (Financial Conduct Authority).
However, if the application is for business purposes (such as buying an investment property) it is classed as a commercial transaction and does not fall under FCA jurisdiction.
Regulated: If you take out a bridging loan to break a property chain and use the fund to buy your new residential home.
Unregulated: A bridging loan used to purchase an investment property.
When searching for a bridging loan, always ensure that the lender or broker you use is FCA-regulated, as this will ensure your legal rights are protected.
Willows Finance is an FCA authorised brokerage and we have a long and proud history of only working with FCA-regulated lenders. Our FCA details can be found here
We Compare 100's of loans from leading lenders
You may need a solicitor at some point during the bridging loan process, although it depends on the lender and your personal circumstances.
This is because some lenders offer their own internal legal services. If you take up this option, it is referred to as dual representation, as their legal team will be representing both the lender and your interests.
If the lender is not able to offer legal assistance, you will need to source and instruct your own solicitor. Some lenders may require you to sign a bridging loan offer in the presence of a solicitor, particularly for applicants over the age of 70.
Yes, a standard part of the application process for a bridging loan will involve a valuation of your property.
This is important for two reasons:
There are a few different ways a valuation can be completed:
The Willows team can advise on the type of valuation needed for your property once you provide more details about its current status and condition.
When you take out a bridging loan, the funds are broken down into two distinct groups:
At the end of the term, you will be asked to repay the gross loan value, as this includes all of the interest and fees. Always look at this figure first when assessing what you can afford to borrow.
In most cases, the interest rate agreed for a bridging loan is fixed. This is because the interest charges are set at the start of the agreement and rolled up for payment at the end, so you should always know exactly what is due.
When you’re ready to repay your loan, get in touch with the lender and request your settlement figure. You can repay the loan at any time during the term and will only be charged interest for the period you used.
Example:
If you take out a 12-month loan with interest deducted upfront and repay after 6 months, the unused 6 months of interest is typically rebated.
In most cases, the interest for a bridging loan is paid in full at the end of the term. However, if you prefer to pay it off each month, this is something most lenders should be able to offer.
This would mean the interest is not deducted upfront, so your net loan amount may be higher. The lender will likely require proof of income to ensure you meet their affordability criteria.
There is usually an exit fee to pay when you reach the redemption stage, with the charge varying depending on the lender.
Some lenders may charge an early repayment fee on a bridge loan, but this is not considered the norm.
.
At Willows, all fees are disclosed upfront in your quote, so you always know exactly where you stand.
We do not charge upfront broker fees unless:
Always be cautious if another broker asks for an upfront or commitment fee. If one is requested, make sure it is tied to clear and specific criteria, as outlined above. If a broker or company requests an upfront fee of around £495 without justification, it’s best to proceed with caution.
Whilst having good credit is always a plus when applying for a loan of any kind, it is not a necessity to secure a bridging deal that can work for you.
We work with lenders that cater to a variety of credit profiles and financial situations, with many specialising in offering deals that complement less-than-perfect credit scores.
You do not have to be a UK resident to secure a bridging loan. We work with lenders that consider all residency and visa types.
.
This is not a strict requirement for most lenders. As long as your exit strategy is solid and realistic, most lenders will consider this type of application.
An exit strategy is your plan to repay or redeem the bridging loan. Common exit strategies include:
Your exit strategy will play a key role in determining the success of your application. If lenders are satisfied you will be able to repay the loan in full at the end of the term and you meet their other criteria, you stand a good chance of being accepted.
.
It is highly recommended that you have a backup plan in place, as circumstances can change unexpectedly.
If your original exit strategy doesn’t work, you may need to consider selling the security property. Whilst some borrowers plan to refinance, selling might become the only viable option if refinancing fails.
Bear in mind, that failure to repay the loan in full could see your property repossessed and sold by the lender. This is often the last resort, but it remains an option if no other suitable repayment solution can be agreed.
Most bridging loan lenders allow extensions, although they are not guaranteed. If you expect to go beyond the agreed term, get in touch with your lender as soon as possible.
If an extension is granted, it may involve a higher rate of interest and additional fees, so ensure you can afford to take this on before you agree.
Bridging loans are designed for speed. In some cases, we’ve had clients apply on a Thursday and receive funds by the following Tuesday.
How quickly you receive the funds depends on:
Speak with a member of the Willows team who will be able to give you an estimate of how long the process should take.
Whilst bridging loans are short-term by design, most lenders do not impose minimum terms. Some may have a minimum term of 3 months, but not all do.
.
Taking on a bridging loan is a big financial responsibility so it’s only natural you’ll want to find out as much information as possible.
Whether you’re brand new to the idea and are exploring your options or know exactly what you are looking for and are ready to get started, the Willows team is on hand to help.
Call us on 01656 766 158 and we’ll do everything we can to make the process easy and hassle-free.
Getting a quote won’t affect your credit score
We’re extremely proud to be rated ‘Excellent’ for our service standards year after year. Since 2008 we’ve helped thousands of customers across the UK to find the right finance for their needs – no matter how complicated the circumstances.
At Willows Finance we ensure your personal information is kept secure and confidential.
PRIVACY OF YOUR INFORMATION
At Willows Finance Ltd, we appreciate that your privacy is extremely important to you. With this in mind, we have put in place a number of measures to ensure that any personal details we obtain from you as a result of visiting this website is processed and maintained in accordance with accepted principles of good information handling and also in accordance with the Data Protection Act 1988.
This statement provides you with details of the type of information we may hold about you, how we obtain and use information and how we protect your privacy.
Willows Finance Limited
Brocastle, Bridgend, CF35 5AS
Authorised and regulated by the Financial Conduct Authority
Firm Reference Number: 670052
Company Number: 6678545 (Registered in England and Wales)
This document outlines the services we provide. If you need clarification, please contact us at 01656 766158.
We offer first and second charge regulated mortgage contracts for business or personal use.
Other finance options may include:
Regulatory Status:
We offer an advised mortgage broking service and provide enough information for you to make an informed decision.
We are not independent financial advisers. Free debt advice is available from the Money Advice Service.
You can view our privacy policy at: https://willowsfinance.co.uk/privacy-cookie-policy/.
Lenders may also have their own privacy policies which will be provided to you.
We charge a broker fee upon loan completion. The average fee is approximately 5%, depending on your situation.
Fee details:
No refund is offered after completion. You may pay upfront or add the fee to your mortgage. Fees and commission will be detailed in your ESIS and Mortgage Agreement.
You will receive a Mortgage Agreement and an ESIS document detailing:
You may cancel your application anytime before completion without any charge. Mortgages cannot be cancelled after completion.
Missing payments can lead to charges, repossession, and negative impacts on your credit rating.
Consolidating debt may result in higher long-term interest. Securing debt against your home increases risk.
Your home may be repossessed if you do not keep up repayments on a mortgage or other loan secured on it.
If you wish to complain, contact us at:
Willows Finance Limited
Brocastle, Bridgend, CF35 5AS
Tel: 01656 766158
You may be able to refer your complaint to the Financial Ombudsman Service.
We are covered by the FSCS. You may be eligible for compensation of up to £85,000 per person per firm for mortgage advice and arranging.
More info: www.fscs.org.uk
After processing your application, you’ll receive a Mortgage Agreement and have a 7-day reflection period.
Contact us during this period with any questions. To proceed, sign and return the agreement.
Let us know what you're looking for today