Scotland represents some of the most scenic and tranquil locations within the UK. With this in mind, it is no wonder that prime real estate in Scotland is both competitive and substantially-priced.
Bridging loan lenders are aware of this, and are ready to help homeowners secure convenient property finance.
At Bridging Options, our bridging loans Scotland team is equipped to connect you with high street lenders if needed, or a traditional lender if you need a typical bridging loan for residential properties.
If you are looking to purchase a Scottish property, or you need to secure funding for property development, retirement relocation, and more, Bridging Options is here to help. This page will cover all the basics of bridge finance.
What is a bridging loan?
Bridging loans work by seeking to fill a gap between the sale of one property and the acquisition of another.
Bridging loans take into account property value in accordance with property law rules regulated by the Financial Conduct Authority, in addition to credit history, exit strategy, as well as any other type of collateral accepted to secure the short-term finance loan.
Bridging loans are essentially a type of funding you can use that is secured against something that is pending a sale, that returns the funds to the bridging loan lender.
With this in mind, there are two main types of bridging loans.
Open bridging loan
An open bridging loan is a type of bridging finance that has no fixed end date.
This means that open bridging loans can be repaid at an agreed-upon date according to what the borrower feels they can manage.
Fewer lenders offer bridging loans that are open.
A traditional high street lender operating within high street banks would be the likeliest type of lender to move forward with open bridging finance.
Closed bridging loan
Closed bridging loans are the most common types of bridging finance offered.
A bridging loan that is closed has a set and fixed end date by which the borrowed funds must be repaid. This timeframe can range from 12 months (the most common) to up to 3 years.
How do you get a bridging loan in Scotland?
No matter where in Scotland you are considering buying property, the best course of action is to confer with an appointed representative that can guide you through the bridging finance process.
An important fact to keep in mind is that a bridging loan is a secured type of property finance.
This means you will need to have a current property, an adequate cash flow, and certain qualifications to secure funding for a new property in Scotland.
Our team of advisors is equipped to answer all your questions and provide the most pertinent advice to secure fast finance for your short-term finance needs.
Who can get a bridging loan?
Virtually anyone can get a bridging loan granted you meet the qualifications.
Property finance largely centers around the value of your current property that is then matched to the new property in Scotland you are seeking to purchase.
Firm exit strategies and consideration of other debts or a current mortgage are also factored into the decision-making process.
Types of bridging finance available in Scotland
Typically, there are three main types of bridging finance available: commercial, residential, and development finance.
Let’s take a look at all three trading styles.
There are bridging loans to help you acquire commercial properties could be but are not limited to, farming and agricultural properties, hotels, rental properties, etc.
The need to provide finance in a speedy manner for residential property is perhaps the main focus of bridge loans. When a mortgage is not enough, a loan within bridging finance is perfect for a purchase in either first, second, or even third charge, bridging loan choices.
Development is often something that falls outside of the purview of a traditional mortgage, therefore, when seeking property developmental needs, a non-status bridging loan is a perfect choice.
Why choose Bridging Options for bridging loans in Scotland?
We work tirelessly to connect those needing bridging finance in Scotland to the lender that will meet their own individual needs.
Whether you need advice on the process in more detail, or you need to be connected to a lender as soon as possible, we are here to help and meet your needs in a timely, courteous, and professional manner.
As with any fair investment company, and certainly with a mortgage, there are sets of criteria that must be met to secure bridge loans.
Typically, you will need to have perfect exit strategies, adequate and steady income, a property that matches the value of the loan, and decent credit history.
Just like a mortgage, you will also need proof of income to secure bridge finance. This is crucial to ensure you can make up for any deficiencies that may arise if the sale of a property falls through.
The approval process is varied, but you can usually expect the process to complete within 1-3 weeks. The processing of your application is much shorter, and you will typically be connected to a lender within 24-48 hours.
The usual length of these loans is 12 months, but the time allotted before payback of the loan can range as high as three years.
There are also some forms of bridging that can last for only a few months. But one year is certainly the industry standard based on a typical residential type of bridging.
Yes, you must have some form of acceptable collateral in order to qualify for bridging loans. This is almost always a house that you are placing for sale, but depending on the type of loan you are seeking, this could also come in the form of expensive items like jewellery, vehicles, or something of great value that the lender is willing to accept.
You can use a bridging loan calculator to calculate exactly how much you can expect to receive based on the value of your property or the miscellaneous item in question, but it would be worth speaking to a lender first to get approval.