Some forms of Bridging Loans are not regulated by the Financial Conduct Authority.
What is a bridging loan?
A bridging loan can be used to borrow money quickly and for a short period. It can help to ‘bridge the gap’ if you want to buy a new home before your old one has sold or buy a property at Auction. They are useful and highly flexible if you need the finance quickly but should only be used for short-term lending.
Just like a mortgage, the loan is secured against a property. This might be the property that you are purchasing – for example at auction, or it could be secured against a property that you already own, such as your residential home. You should always plan your ‘exit strategy’ before taking out a bridge loan, because it should not be used for long term funding.
Bridging loans are priced monthly, rather than annually, because people tend to take them out for a short period. Typical rates vary from around 0.49% to over 1% per month, depending on the security property and the loan to value. You will also pay set-up fees, usually around 2% of the loan you want to take out, so it is advisable to only take a bridging loan out if you are confident that you won’t need it for a long period of time.
In cash terms, bridging loan providers might lend anything from £25,000 to millions. But you will usually only be able to borrow a maximum loan-to-value ratio (LTV) of 70-75% of the value of the property.
This is a more complex for of bridge funding, to be used when carrying out extensive development on a property or building from the ground up. At Aspire Financial Services we have access to bridging development finance through a range of different lenders and will be happy to discuss your needs.
Aspire Financial Services can help you
The way a bridging loan is structured can vary depending on your needs and circumstances. At Aspire Financial Services we understand bridging and can match the right lender to your needs.
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