Large bridging loans

What is a large bridging loan?

Bridging loans are a fast and flexible form of short-term funding. Common reasons to apply for a bridging loan are to quickly purchase a property — from auction, for instance — or for property developers who need additional funding to allow further time for sales. They can, in fact, be used for essentially any business purpose within reason.

A large bridging loan is when the amount that is being borrowed from a lender reaches the millions or even billions. Technically there is no upper limit to a large bridging loan; it’s left up to the lender’s discretion.

How does a large bridging loan work?

To access a bridging loan, you must offer up a property to be used as collateral, should you fail to repay the loan. The amount of money you can borrow is based on the Loan to Value (LTV) of the property, usually capped at 80%.

Large bridging loans are short-term solutions and therefore typically need to be repaid within 12 months, although some lenders may extend this to as long as 36 months. While there are no monthly repayments to deal with, it’s wise to have a solid exit strategy in place to repay the bridging loan in full along with any interest you’ve accumulated.

How do I know if I’m eligible for a large bridging loan?

The lending criteria for bridging loans are far more flexible than those of a standard mortgage application. This means you’re able to successfully apply for a large bridging loan even if you have a poor credit score. Applicants must be over 18 years of age, but there’s no strict upper age bracket.

Lenders are more interested in smart business moves, meaning that as long as you have property that can be used as collateral and a sound exit strategy to give lender’s confidence that you can make your repayments, you’ll be considered for a large bridging loan.

Contacting a specialist broker is the wisest decision as they can find you a lender that is suitable for your situation.

How can I apply for a large bridging loan?

For anyone looking to take advantage of a large bridging loan to finance their next project, the process isn’t complex. All you need to do is follow these steps to ensure your application is as quick and effortless as possible.

1. The initial conversation with your brokerBefore physically applying for your large bridging loan, it’s important that you get in touch with one of our bridging loan specialists at Positive Commercial Finance to go through the details of your application. This conversation will cover the details of your bridging loan request such as the reason for the loan, how you intend to repay your lender and your relevant experience.
2. The loan acceptanceOnce your broker is satisfied with your bridging loan request, they can get to work with approaching lenders on your behalf. The initial offer will be conditional and will depend on the valuation of the property being used as collateral, plus various legal work.
3. The property valuationThis process involves lenders instructing a valuation of the property in question to determine whether it will act as sufficient collateral for the loan amount. A professional valuer will report the condition of the property and note its overall value.
4. DocumentationYou’ll need to provide a number of documents to support your bridging loan application, including bank statements and credit checks. The reason for this is to satisfy the lender that you have a clear and achievable exit strategy for repaying the loan amount.
5. Formal offerOnce all your documentation has been checked and the valuation stage is complete, you’ll receive a formal letter of acceptance for your bridging loan. This will usually include a legal pack which will be sent directly to your solicitor.
6. Receiving fundingYour funding will become available after receiving your formal letter and all legal work has been completed. It’s likely that the funds will be sent to your solicitor who will transfer the money to complete the property purchase. Companies applying for a large bridging loan to use as a short-term cashflow solution will receive the funds into the company’s bank account.