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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: 19th May 2021*

Most bridging loan lenders don’t have a strict maximum amount that they’re willing to let eligible customers borrow, which is good news for anyone who needs a large amount of finance quickly. If you’re in the market for a large bridging loan, this guide is for you.

Seeking professional advice is highly recommended if you’re planning to take out a hefty amount of bridging finance, and in this article, you’ll learn everything you need to know about large bridging loans and how to find a broker who specialises in them. Plus in our FAQ section, we tackle the questions we hear most often about large bridging loans.

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What is a large bridging loan?

Bridging loan sizes can vary dramatically. While some bridging finance lenders will class anything over £2.5 million as a large loan, other providers arrange much larger deals than this every day. Bridging loans worth tens of millions are not uncommon, and it may even be possible to borrow up to £250 million under the right circumstances.

The key thing to remember about bridging finance is that they’re short-term loans and the amount you can borrow is largely governed by the strength of the exit strategy or, to put it another way, how you plan to pay off the bridging loan.

If your exit strategy will recoup the amount you need to borrow and cover the interest charges, the sky’s pretty much the limit for the amount you could potentially borrow. Since most bridging lenders are not regulated, they have the flexibility to assess all applications on a case-by-case basis.

What are they used for?

Large bridging loans are most commonly used for investing in high-value property where timing is of the essence.

Here are some example scenarios…

  • Buying a high-value property at auction: Winning bidders usually need to exchange contracts and pay a deposit on the day and then pay the remaining amount within 28 days. In a scenario like this, a mortgage might take too long to arrange, but a specific type of bridging product called auction finance could give you the capital needed ahead of the deadline.
  • Renovating an uninhabitable property: Let’s say you want to buy a dilapidated property and a plot of land that’s worth over £2.5 million, despite the extensive work that is needed. If a mortgage lender believes that the property is uninhabitable, you may not be able to get a traditional mortgage on it. A bridging loan, however, could provide you with the funds needed to make the property mortgageable again. You could then take out a land mortgage to pay off the bridging loan.
  • Heavy refurbishment work: You might already own a property and want to invest £2.5 million or more into refurbishments. Using a bridging loan would allow you to start the works quickly and borrow against the property’s increased value via a remortgage to pay off the debt after the renovations have been completed. For projects involving extensive development work, your broker might suggest considering development finance as an alternative to bridging finance.
  • Buying land without planning permission: Perhaps you want to get a mortgage on a plot of land that is worth a hefty amount but has no planning permission in place. Some mortgage providers might decline to lend under these circumstances, and there might be a cash buyer ready to pip you to the purchase. But by using a bridging loan, you could secure the plot before applying for planning permission. Once it’s been granted, you could apply for a mortgage to cover the exit strategy.

These are just a few common scenarios where somebody might use a large bridging loan, but they have many other uses. In a nutshell, if you’re looking to make a large property investment but don’t have the time to arrange a mortgage, don’t want to take one out, or won’t qualify for one in the short term, bridging finance could be a fallback option.

How to get a large bridging loan

If you’re making a large investment and need a sizable amount of bridging finance, there could be a lot at stake, so be sure to seek professional advice before proceeding. Bridging loans tend to come with high interest rates and are often only recommended as a last resort.

Bridging loan providers can be large organisations or small ‘private’ investors willing to look at bridging loans on a case-by-case basis.

With this in mind, it’s a good idea to start off by speaking with a specialist bridging finance broker who can help you determine whether it’s the right option, suggest potential alternatives, and make sure you end up with the best possible deal if you choose to proceed.

If the amount you need to borrow is especially high, you’ll need to find a bridging lender who specialises in high value transactions, and a broker who arranges these deals every day can introduce you to the right finance provider first time, potentially saving you time and money.

To qualify for a large bridging loan, you will need the following…

A strong exit strategy

Having a viable exit strategy is usually a deal-breaker for bridging finance lenders, and this is certainly true when it comes to high value transactions. The exit strategy is basically how you plan on paying off the debt at the end of the term. Where property is concerned, this would usually be through a remortgage or the proceeds from a sale.

Let’s say you need to borrow £3 million to purchase a house before a rival buyer gets in there. The property you’re buying would have to sell for at least this amount if you’re planning to offload it, or be able to raise this figure via a remortgage.

Bridging finance lenders like to see evidence that this is the case, so it obviously helps if you have an offer on the table already and a formal valuation has been carried out.

Clean credit

This isn’t an absolute necessity but it will help your cause and give you access to a wider range of bridging finance lenders than somebody who’s had credit problems. Bad credit is usually only a deal-breaker if it puts the exit strategy at risk.

You can read more in our guide to bad credit bridging loans.

Experience in property

For a high-value deal or complex development project, some bridging loan lenders will insist that you have experience in property. Having a strong track record in the industry will help you convince bridging finance providers that you have the know-how to achieve your plans.

If you have little or no experience in property, a deal might still be possible as there are specialist lenders for first-time investors, commercial developer and landlords.

A healthy deposit

Most bridging loan lenders will expect you to put down at least 30-35% of the property’s value as a deposit, but for high value or high-risk deals, you might find this rises to 40%. Putting down extra may give you access to more lenders and better interest rates.

How interest is charged

If you’re planning to take out a substantial bridging loan, it’s important to weigh up the overall cost involved, which means tallying up how much the interest will add to the debt.

Interest on bridging finance is typically charged in one of three ways…

  • Monthly: Similar to an interest-only mortgage, the borrower makes payments to cover the interest each month and the loan balance is due at the end of the term.
  • Rolled up: Often chosen by borrowers who will have no capital until their exit strategy pays out. No interest payments are due during the term. Instead, the monthly interest is compounded and added to the final debt amount.
  • Deferred: The customer borrows the interest along with the loan amount. No monthly payments are needed but full amount payable is agreed at the beginning of the term, based on how many months’ worth of interest you’ve borrowed.

Speak to an expert about large bridging loans

If you’re considering taking out a large bridging loan, the best place to start is by speaking to a professional. We offer a free broker-matching service that can pair you with the right bridging loans specialist for your needs and circumstances.

The advisor we introduce you to will be a fully-vetted expert who specialises in large bridging loans and arranges them for customers with the same background as you every day. Speaking to an expert before you press ahead will mean you’re introduced to the right lender first time, saving you time, money and potential heartache in the long run.

Call 0808 189 2301 or make an enquiry online and we’ll match you with the broker who is best positioned to help you get a large bridging loan with the best rates available.

FAQs

Got a question about large bridging loans that we haven’t covered so far? Take a look through our FAQ section to find out whether it has the information you need.

What’s the largest bridging loan I could get?

This all depends on the strength of your exit strategy. If you can prove that it’s likely to raise a certain amount by the end of the term you’re willing to commit to, it may be possible to convince a bridging finance lender to let you borrow that figure.

Just keep in mind that some bridging loan providers have maximum loan amounts, and this can vary greatly. Some cap the amount at tens of thousands, others tens of millions, and a minority will even go up to hundreds of millions under the right circumstances.

Can I get a large bridging loan if I trade as a limited company?

Yes. Trading as a limited company won’t hurt your chances of getting a large bridging loan and the rates are usually no different. The lender might, however, require a personal guarantee from the company’s directors and, in some cases, your choice of approachable lenders might be higher if your business is a special purpose vehicle (SPV).

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

Almost anywhere. Some bridge finance lenders have minimum deal values so high that only properties in London qualify. In Scotland and Northern Ireland, meanwhile, you might find some geographic restrictions in places like the Highlands or away from the mainland. Deals might be available on a case-by-case basis, though.

Updated: 19th May 2021
OnlineMortgageAdvisor 2021 ©

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.

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