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Large Bridging Loans

Large bridging loans are expensive but can be crucial for certain circumstances. Here’s what’s involved.

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Pete Mugleston

Author: Pete Mugleston - Mortgage Advisor, MD

Updated: June 30, 2022

There may be a number of reasons for needing quick access to a substantial cash sum, and this is where large bridging loans can be useful. Bear in mind this is big money borrowing though, and applying to unlock funds this way shouldn’t be done lightly.

Here we outline what’s involved with a large bridging loan, how much they cost, what to consider and how to go about getting one.

How big can a bridging loan be?

There are no fixed caps or limitations when it comes to bridging loan borrowing, which is good news for high net worth individuals who are looking for a much-needed stop-gap in property financing. Deals worth tens and even hundreds of millions are not uncommon.

Lenders involved in high value bridging loans take a more exclusive approach instead of applying a one-size-fits-all rule book to potential clients. When and how you can afford to pay back the loan, plus interest and fees, is the primary concern, so really there is no ceiling for eligible customers.

Anything around £2.5million and £3million and above will be considered a large loan. These products can then stretch into the tens of millions, sometimes hundreds, and it’s not uncommon for high net worth individuals to take these on for a variety of reasons, which we will explain later.

It’s worth bearing in mind that once borrowing of this kind reaches these sorts of numbers, it’s unlikely you will be able to secure a loan without the help of a bridging finance broker. However, this option is highly advisable anyway because of the dramatic savings you could make.

High net worth exemption

If you are considered a high earner – usually if you have a £300,000 annual net income – or you have assets in excess of about £3million, you could be granted an exemption set by the Financial Conduct Authority, which allows lenders to approach your case in a far more flexible manner when they are assessing your application.

This means other parts of the market might open up to you that are closed off to others and lenders will take a more holistic approach to an applicant’s liquidity and circumstances, resulting in greater opportunities for securing a large loan.

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Why would you need one?

The purpose of a bridging loan is to get access to funds quickly. Even high net worth people are sometimes not in a financial position to move forward when the clock is ticking and maybe help is needed with a temporary cash flow problem. A large bridging loan provides that opportunity.

Perhaps you are an investor and are between properties, with one pending a sale while another needs purchasing. Or you could be buying at auction, where the demand for a quick turnaround of deposit and full balance are mandatory but your mortgage is not yet in place.

You could work with commercial properties or building renovations, which don’t yet qualify for the traditional mortgage you need, or you could simply be waiting for a mortgage process to complete and don’t want to miss your chance to win a sought-after home.

Whatever you need a big bridging loan for, a clear exit strategy will need to be evidenced in advance.

How much would it cost?

Bridging loans are often a last resort in borrowing because they’re expensive. As well as the whole sum needing repaying by either a fixed date or an undecided date – called ‘open’ and ‘closed’ loans – in the not-too-distant future, there will also be higher interest rates and fees to pay. If you’re hoping to secure a substantial loan, you could also be required to pay a bigger deposit percentage.

As a guide, try inputting your numbers into our bridging loan calculator to get an idea of how much you could be paying.

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How a broker could help you secure a high value bridging loan

High value bridging loans are anomalies within the mortgage industry. They are not regulated by the Financial Conduct Authority, they operate in a competitive market  where rules and boundaries are ambiguous and costs that fluctuate according to circumstance.

This makes navigating the market almost impossible to do alone. A good bridging finance broker will give you practical and resourceful support, provide insights to the bridging loan landscape and work to negotiate your deal.

Because traditional lenders and high street banks are often out of the picture when it comes to bridging loans, it’s likely that only experienced brokers will have access to the kinds of niche lenders who do. It’s in your interest to utilise their skills, expertise and contacts in the field, because even if they can reduce the rates you pay by just a few per cent, it could amount to thousands in total.

Make an enquiry with us and we’ll match you with a broker who specialises in arranging high value bridging loans today.

Eligibility criteria

When it comes to the big money loans, regular mortgage criteria such as credit score and income are less important. However, dealing with larger sums of money, lenders are going to be very careful and diligent in who they lend to.

While they are certainly more flexible when it comes to lending criteria and approving applications, they must still be assured that the borrower is solvent enough to afford such a large loan and they will want to know how and when you intend to pay back the debt. The stronger the exit strategy is, the stronger your application will be.

Other factors

  • Deposit: As with most forms of borrowing, the healthier your deposit, the better your bridging finance offer. Even if you’re high net worth, you’ll still need about 30-35% to put down, or possibly 40% if it’s risky or a particularly large loan, so bear this outlay in mind.
  • Credit score: Your past financial behaviour is less important for a bridging loan application, unless you have any bad credit that puts the exit strategy at risk. However a good history is always favourable and any issues should not place risk on your loan exit strategy.

Property experience: This might come into play if you need a bridging loan for development or investment purposes. There are lenders out there who will be willing to take a chance on first-time property developers, but any positive experience and reputation you have will go in your favour with lenders.

Lenders and rates

The bridging loan market is buoyant, with niche lenders such as Holme Finance Bridging Solutions, Clifton Private Finance, Mint Property Finance and InterBay Commercial competing to offer the best deals they can and releasing funds quickly to those who need a quick cash injection.

At the time of writing, rates vary widely and have no obvious trajectory at first glance. Some lenders advertise exclusive rates of 0.175%, while others claim 0.44% as their offering.

Most lenders are discerning enough to realise that the exit strategy affordability is key, however high net worth individuals are in a good position to unlock better rates if they have assets that the bridging loan can be secured against. For example, the flexibility within these unregulated loans means items such as yachts, gold and other valuable possessions can be taken into consideration as collateral security.

A good broker, like the ones we work with, will be able to secure a deal with a variety of traditional bridging lenders and specialist providers too. High street banks and traditional lenders don’t have the capability to offer such bespoke lending products at this level.

What are the alternatives?

It’s always worth considering all the options when it comes to big borrowing, especially as bridging loans are so expensive.

High net worth borrowers will have a number of alternative borrowing options that may or may not tick the boxes that a bridging loan would. For example, a Lombard loan is backed by assets, which is when securities such as insurance policies or a stocks portfolio secure the loan. An expert will be able to point you in the right direction in this complex arena.

Other options

If time is not an issue, there are other alternatives to bridging loans, which may prove to be less expensive:

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Get matched with a large bridging loan broker

Having guidance and support when looking for a bridging loan can be a daunting task, and especially challenging with a high value borrowing. The advisors we work with are experts in their niche and understand the quirks of this competitive market.

They have experience, contacts and know-how that help their clients to secure the very best deals, which can go towards saving thousands in unnecessary costs. We can match you to the right broker for your circumstances and get the ball rolling to negotiate on your behalf.

Contact our bridging loan team and get a free, no obligation consultation chat. Call us on 0808 189 2301 or make an enquiry today.

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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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