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By Pete Mugleston | Mortgage Advisor

Pete has been a mortgage advisor for over 10 years, and is regularly cited in both trade and national press.

Updated: 27th October 2020*

We get plenty of enquiries about large bridging finance loans, so we’ve put together this handy guide.

Here, you’ll find information about how much bridging providers are willing to lend, how to get a large bridge loan and why seeking specialist advice is vital.

The following topics are covered below…

If it’s general information about bridging loans you’re looking for, head over to our bridging finance hub.

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What is considered a large bridging loan?

What is classed as a large bridging loan is subjective. Given that most bridging lenders are unregulated, they have the flexibility to grant loans of any amount, within reason.

Deals worth tens of millions are not uncommon and getting one in this ballpark is possible if you can evidence a strong exit strategy, i.e. a plan to repay the debt and cover the accrued interest at the end of the term. With property and land deals, the exit strategy is usually a sale or a remortgage, although some lenders allow ‘non-standard’ exits.

Are large bridging loans more difficult to get?

Not necessarily. Large bridging loans are not considered higher risk per se – the viability of any bridging finance agreement is usually weighed and measured on the strength of the exit strategy, so a large bridging loan with a water-tight exit plan in place would actually be more attractive to a lender than a small loan with an uncertain exit strategy.

The bridging finance brokers we work with have access to the entire market and can connect you with the bridging provider most likely to offer you a large loan with favourable rates, based on your needs and circumstances, if you make an enquiry.

So, are smaller bridging loans more difficult to come by?

It depends on what you would class as a ‘small’ loan, but certain lenders do have a minimum amount they’re willing to offer to bridging borrowers. Some would turn you away if the deal is worth less than £50,000, others £30,000 and a minority £10,000.

That said, given that bridging loans can be flexible and are assessed on a case-by-case basis, it may be possible to land one of less than £10,000 if the exit strategy is viable.

How much deposit do I need for a large bridging loan?

If the loan sum you’re after is particularly large, it’s always a good idea to be clear on the full amount the deal is likely to set you back by factoring in the required deposit amount.

Most straight forward bridging finance deals are offered with a loan to value (LTV) ratio of 70-75% gross, so with the interest payments factored in, a deposit of 30-35% of the property’s value is usually needed. This can change considerably for complex deals.

What is classed as risky can vary. Some lenders are wary of deals involving certain commercial property types, like petrol stations and shops, and others aren’t keen on land purchases. For these deals, some providers will cap LTV at 50-60% and others won’t lend at all.

If you’re looking for a large bridging loan in any of these scenarios or have been turned down for one in the past, get in touch.

The advisors we work with have access to every bridging lender on the market and can connect you with the one offering the best deal for a customer with your needs and circumstances.

How to get a large bridging loan with the most favourable rates

Finding the best large bridging finance deal is a matter of having whole-of-market access on your side and meeting the eligibility requirements of as many lenders as possible.

Since bridging loans are always assessed on a case-by-case basis, their eligibility and affordability criteria are rarely set in stone, but lenders tend to reserve their best rates for borrowers with the following…

A strong exit strategy

Much of the underwriting process for bridging loan hinges on the strength of the exit strategy, which is why they’re usually much quicker to arrange than mortgages.

As we’ve already touched on, the exit strategy is usually the sale of a property or a remortgage, but certain lenders are okay with ‘non-standard’ exit strategies such as using investments or endowments to pay off the balance at the end of the term.

With non-standard exits, the lender may want to see that the funds are due to enter your account within a certain timeframe, and may charge daily interest instead of monthly.

For standard exits, the lender will need you to evidence that the property in question is likely to raise enough to cover the loan amount plus the interest at the end of the term, either by sale or a remortgage. Obviously, it will help if you have an offer on the table or a remortgage agreement in principle to show in advance.

Clean credit

Bad credit is only likely to derail a large bridging loan deal if it puts the exit strategy in jeopardy. So, if your plan is to remortgage, you may need a deal in principle from a specialist adverse credit lender, but even then, the underwriters might be concerned about the possibility of further adverse credit building up during the loan term.

Having clean credit won’t hurt your chances of landing the best large bridging finance deal with the most favourable rates, as this will help convince the lender you’re low risk.

Read more about bad credit bridging loans.

Experience in property

Like bad credit, having no experience in property won’t necessarily be a deal-breaker for bridging finance lenders as there are providers who are more than happy to deal with first-time investors, landlords and buyers – but a strong track record in the market will help convince most lenders that you’re capable of achieving your plans.

Indeed, some lenders might insist on experience before they green light a substantial loan, if it’s for a particularly complex development project.

A good security property

Bridging finance can be secured against either a property you’re buying or properties you already own. The more likely to property is to recoup the loan amount plus the interest at the end of the term, the more likely the lender is to offer you a favourable deal.

During valuation, they will likely take factors such as the property’s location into account, as well as whether there are any variable which may put off prospective buyers, such as leaseholds or elements of non-standard construction (e.g. thatched roofs, timber frame).

By putting up additional assets/security against a bridging loan, it may be possible to convince a lender to offer you a deal with 100% LTV. Most lenders are fine with multiple securities but may expect you to foot valuation fees for each one individually.

A healthy deposit

If there’s any risk involved in the deal, putting down extra deposit could offset some of it in the eyes of the lender. The minimum a bridging lender would usually expect is 30-35% of the property’s value, but putting down at least 40% (if you’re in a position to do so) could help you lock down a superior deal.

If you’ve been turned down for a large bridging loan before or fear that you might be based on the criteria outlined above, get in touch and the experts we work with will help you find a lender who is flexible enough to cater for you and offer favourable rates.

How interest is charged on a large bridging loan

When taking out a bridging finance loan for a substantial amount, it’s important to work out the overall cost of the deal beforehand.

In order to do that, you will need to understand how the lender will charge interest on the bridging loan.

Bridging finance is always offered on a short term, interest only basis and providers charge interest in one of three ways…

  • Monthly:
    This works similarly to an interest only mortgage, in the sense that the borrower pays off the interest each month and the loan balance itself at the end of the term.
  • Rolled up:
    The borrower makes no monthly payments (so this repayment method is ideal for borrowers who have no capital until the exit strategy pays out). Instead, the monthly interest is compounded and added to the loan amount at the end of the term and the cumulative total is due then.
  • Deferred:
    The customer ‘borrows’ the interest for a set period and the total cost is agreed at the beginning of the term based on how many months the loan is for. No monthly payments are needed as the combined total is due as a lump sum at the end.

Can I get a large bridging loan for a buy to let property?

Yes! It would theoretically be possible to take out a bridging loan for a buy to let property which has a high purchase price.

In this scenario, it may be worth considering whether to apply for the bridging finance and the Buy To Let mortgage with the same lender.

These deals are sometimes referred to as bridge to let agreements and would usually see the lender aim to offer a buy to let deal in principle when the bridging funds are due to be released.

LTV would typically be capped at 75% and the borrower would need to meet the provider’s standard criteria for both Buy To Let mortgages and bridging finance.

Are there large bridging loans for Limited Company borrowers?

Yes! Your chances of securing a large bridging loan are unlikely to be affected by your status as a Limited Company borrower. The rates offered to Ltd Company bridging applicants are usually no different from those given to other customers.

Ltd Company bridging applications are often treated similarly to Ltd Company buy to let deals, so the borrower may request a personal guarantee from the company directors.

It may help your cause if your Ltd Company is a Special Purpose Vehicle (SPV) by increasing the number of approachable lenders, but this is not a necessity for all providers.

Can I get a large bridging loan anywhere in the UK?

Almost anywhere. The only thing you should take note of if you’re looking to borrow in England is that some lenders have minimum loan/property values so high that only projects in London will be viable.

A restricted number of bridging providers offer loans in Scotland and the rates and criteria there is usually no different, although there are postcode restrictions north of the border and you might struggle to find a lender if the investment is away from the mainland.

It’s a similar case in Northern Ireland. Only a limited number of bridge lenders operate there, usually on an unregulated basis with postcode restrictions, and when it’s an attractive deal with a strong exit strategy behind it.

Read more about which parts of the UK bridging finance is available .

Speak to a large bridging loans expert

For further information about large bridging loans and to get the ball rolling on your application for one, call Online Mortgage Advisor today on 0808 189 2301 or make an enquiry here.

Then sit back and let us do all the hard work in finding the broker with the right expertise for your circumstances.  – We don’t change a fee and there’s no obligation or marks on your credit rating.

Updated: 27th October 2020
OnlineMortgageAdvisor 2020 ©

FCA disclaimer

*Based on our research, the content contained in this article is accurate as of 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.