Looking to bridge the financial gap between large property deals? Bridging Options can help to secure a large bridging loan from a range of specialist lenders.
What is large bridging finance?
As a property developer, your cash flow likely fluctuates depending on your project timeline. So what if an unmissable deal comes along, and you don’t have the funds available to snap it up? The solution may be high-value bridging finance.
Large bridging loans are a way for developers to access significant funds for property purchase, typically in a matter of weeks or days. This enables them to be more agile in their decision-making when investment opportunities come along.
Bridging loans are short-term finance, usually lasting no longer than 12 months. Smaller loans start around the £25,000 mark, but for larger loans for high-net-worth individuals, there is no real upper limit. When the loan amount hits seven figures, it is considered a large bridging loan.
How large can a bridging loan be?
For high net worth individuals, i.e. those earning above £300k or with assets exceeding £3million, there is generally no ceiling on a large bridging loan. Anything over £1million is considered a large bridging loan, but deals in the hundreds of millions are not unheard of.
Loan amounts of this size are best negotiated by a bridging loans broker, as they have access to specialist lenders which may not be available directly to individuals.
What can you use a large bridging loan for?
Large bridging loans tend to be used by high-net-worth property investors who need to access funds quickly while they are between property deals.
That includes residential property such as luxury flats, houses and buy-to-let, or commercial properties such as office space, industrial units, restaurants, shopping centres, hotels and mixed-use premises.
Development finance can be used for property purchases, newbuild developments or refurbishment projects.
Large bridging loans are also incredibly helpful as a source of auction finance. Usually, the auction house will require payment in full within 28 days, which rules out traditional mortgages. The bridging loan process is much faster, especially with the help of a bridging loans expert.
What is the lending criteria for a large bridging loan of up to £250 million and more?
As a high net-worth individual, you may be deemed exempt by the Financial Conduct Authority, meaning that lenders can be more flexible in their criteria and offer unregulated loans. This would certainly require the help of a bridging loans broker.
With large bridging loans, most lenders tend to place less importance on things like credit scores and are more lenient when assessing a borrower’s financial circumstances. That said, they are still cautious, of course, and require certain evidence, such as:
Solvency
The lender will naturally want proof of the borrower’s solvency and ability to repay the loan.
Exit strategy
You need a clear exit strategy when negotiating large bridging loans, i.e. a plan of how and when you will pay back the loan by the fixed repayment date.
Large deposit
A deposit between 30% and 40% is the norm to secure large bridging loans. However, a high loan-to-value can be achieved if you have substantial security property, i.e. collateral to secure the debt.
Credit score
While a good credit history will obviously count in your favour, your financial past will be of less importance to a lender when it comes to a large bridging loan. If you have any existing bad credit, this is likely to count against you if it affects your planned exit strategy.
Property development experience
While you may be able to secure high-value bridging finance as a first-time investor, any previous experience will certainly count in your favour.
How much does a large bridging loan cost?
Large bridging loan rates are more expensive than a standard large mortgage. Rates range from around 0.47% – 1.5% per month. However, there are usually no early repayment fees, which can be a bonus for investors.
As well as factoring in interest rates, there are certain other costs associated with large bridging finance:
Arrangement fees
The fees the lender charges for arranging the loan
Broker fees
The amount paid to your bridging loan broker, if you use one
Valuation fee
If you are putting up property as collateral for the loan, you will need to hire a surveyor to produce a valuation report to confirm its market value
Legal fees
A solicitor will be required to draw up the legal agreement between you and the lender
Exit fee
Some lenders charge an exit fee at the end of the loan term of around 1-2% of the loan. However, as mentioned above, there are usually no early repayment fees which means borrowers can save a lot on interest charges if they are in a position to settle the loan before the term is up.
Bridging Options can help you secure a high-value bridging loan – fast
At Bridging Options, we have access to a team of bridging loan experts with a great deal of experience in securing larger loans. They have access to a wide section of the bridging loan market, including both high-street banks and specialist lenders.
Your broker will assess your individual circumstances and goals before pinpointing the right lenders. They will handle the bridging loan application process and secure your funds in a timely manner, sometimes in as little as a few days.
For fast, large bridging finance, contact Bridging Options by filling in our enquiry form, and we will put you in touch with a bridging expert as soon as possible.
Complete our website contact form and we’ll be in touch to assist you!
How much can I borrow?
A good place to start is by using our online bridging loan calculator here.
As with all forms of finance, the loan amount you can borrow depends on the collateral you have available. Large bridging loans are typically calculated at 70-75% of the property value (also known as loan to value). If you have significant assets to secure the loan against, some lenders may go up to 80% or 90%.
Do give very careful consideration to negotiating a high LTV bridging loan, as your assets may be repossessed if you do not keep up the repayments on the debt secured on it.