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100% LTV Bridging Loans

Think you need a short-term loan that’ll cover the full property amount? Read more about 100% bridging loans and whether you qualify.

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Pete Mugleston

Author: Pete Mugleston - Mortgage Advisor, MD

Updated: June 20, 2022

When you’re in need of a mortgage quickly, a bridging loan can provide the short-term answer, until a longer-term solution can be arranged. However, to obtain one, you usually need to put up a significant deposit but what happens if you don’t have one?

This guide breaks down whether loaning 100% of a property’s value is possible via a bridging loan and, if so, what you’d need to do in order to qualify.

Can you get a 100% loan to value (LTV) bridging loan?

Yes, it’s possible. 100% Bridging loans do exist but few lenders offer them and even fewer people qualify for borrowing that amount. That’s because lenders view the risk as higher when a borrower isn’t investing any equity into the purchase themselves. For this reason, you’ll find most bridging finance lenders have a loan to value (LTV) cap, typically around 70-75%, meaning a 25-30% deposit is needed.

The lenders that are open to a 100% LTV arrangement usually only do so if a borrower can provide security in the form of another asset or if the house is being purchased for a price significantly lower than its value – perhaps because you’re buying at a discounted rate from a friend or family member, purchasing a home that already has tenants or have managed to secure a bargain at an auction.

To find a lender willing to offer such a mortgage product, it’s best to do so via a bridging finance broker as many lenders, such as Chase Blue Loans, won’t work directly with the general public.

What kind of security will lenders accept?

If you can’t put up a cash deposit, lenders will need another form of security in order to mitigate the risk they’re taking. Other assets you could provide to satisfy them typically include:

  • Another property you own
  • A boat
  • A car
  • Stocks
  • Bonds
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How to get a 100% LTV bridging loan

If this is an option you want to pursue, these are the steps to take:

  1. Do the maths – Use a bridging loan calculator to determine whether you’ll be able to afford the higher repayments on such a bridging loan.
  2. Decide on your security – Consider what collateral you’d be able to offer a lender in place of a cash deposit and if you could afford to lose it should the repayments fail.
  3. Consider your exit strategy – Oftentimes people refinance onto a residential mortgage or, if redeveloping a property in a short timeframe, they can sell and use the proceeds to pay off the loan.
  4. Consult a bridging loan broker – They can verify your calculations by taking your specific circumstances into account and ensure the asset you want to put up as security will be enough for a lender before working with you to put an application together. Going solo could lead to a loan application rejection which can affect your credit history. They’ll also be able to recommend a lender with a track record of offering 100% LTV bridging loans and negotiate a deal on your behalf
  5. Submit an application – This includes a valuation report of the property, information on your income, proof of the exit strategy, evidence showing you know how to develop a property if you’re planning to renovate, and your credit reports.

Try our bridging loan calculator

With those high interest rates in mind, it’s worth having a look at our bridging loan calculator to get a sense of what repayments for a 100% bridging loan could look like, the total interest you’d end up paying and how either factor might be impacted by lowering the LTV or changing the term time.

While this will give you a good idea of what you can afford, it’s best to follow up the calculations by talking to a broker who can verify its findings and share advice on how to get the best deal possible.

Things to consider before applying

While having a lender cover 100% of the value of your desired property sounds appealing, it’s not without its risks. The collateral you put forward in place of a deposit, be it your home or investments, means the lender is entitled to repossess them should you fail to repay the loan in the agreed term time – typically between 6 and 36 months.

The second thing to consider is the much higher monthly interest rates a bridging loan comes with. The rates usually start around 0.39% a month and can go as high as 1.5%. At 100% LTV, you can expect the rate to sit at the higher end of that scale. This means you’ll be paying more for the loan over time.

It’s also unlikely that you’ll be able to secure such a loan or get a great deal without expert guidance. This is where the brokers we work with can offer support.

Get matched broker who specialises in 100% bridging finance

It’s no use connecting with a general broker in this situation. You require bespoke support and expert knowledge of the bridging finance market as well as someone who has a history of successfully supporting applications for 100% LTV bridging loans. Opting to work with anyone else risks a rejection your credit history can’t afford. This is where the brokers we work with can help.

A free consultation via our matching service will see you connected with a bridging loan expert able to support you in getting the financing you need and fast. Reach out today on 0808 189 2301 or fill out or enquiry form.

FAQs

Can you use a bridging loan for a deposit?

Yes. If you know finance is forthcoming – perhaps through the sale of an existing house or a bonus – you could use a bridging loan to put a down payment on a house. This could then be paid off as soon as that money comes in.

Is a 90% LTV bridging loan easier to access?

Yes. The most common bridging loan LTV is 70-75% but there are lenders that increase that to 80% and even 90%. There isn’t an abundance of lenders that do but such a loan is easier to come by than one with a 100% LTV.

Will I be able to get a 100% LTV bridging loan from a high street lender?

Most lenders offering this type of product are specialist lenders that work exclusively with brokers. They’ll be able to offer more competitive rates and terms.

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About the author

Pete, an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete found great success in going the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained, coupled with his love of helping people reach their goals, led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.

Pete’s presence in the industry as the ‘go-to’ for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for OMA of course!

Read more about Pete

Pete Mugleston

Mortgage Advisor, MD

FCA disclaimer

*Based on our research, the content contained in this article is accurate as of the most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs.

Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

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