How Long Can I Get a Bridging Loan for?

A bridging loan has become an essential finance solution for many property developers and investors. They allow them to get finance secured fast so that they can make quick decisions on projects.

They can be used for a number of reasons, but they are most commonly used for bridging the funding gap when purchasing a property or carrying out renovation work.

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How long is the average bridging loan term?

Despite being a ‘short-term solution’ while long-term finance is put in place, the average bridging loan now lasts 12 months. At this point, the development is usually sold on, producing an income, or long-term finance is put in place so the  loan can be paid off.

In special cases where the borrower can offer a low loan-to-value (LTV), bridging finance may be available for up to 18 months. If finance is needed for longer than this length of time, development finance is often a better solution.

Most bridging loans are repayable after the first month, usually without any exit fees. Where exit fees are applied by some lenders, this is typically one month’s interest and is charged regardless of whether the loan has run to its full term or not.

In general, most lenders offer terms from 1 month up to 1 year, however, each individual lenders’ terms will vary.

Ramsay & White offer bridging loans from 1 month for up to 100% of the purchase price with market-leading rates.

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What if I need to extend the bridging loan? 

While most developers and investors aim to pay off the loan as soon as possible, in some cases, an extension may be required.

This could happen for a number of reasons such as renovation work taking longer than planned, a delay in a mortgage approval or more time needed to find a buyer.

It’s better to arrange the loan term for longer than you need from the outset. If this is not agreed from the get-go, the lender may also agree to extend the loan, however, this will include more costs.

How long does it take to get a bridging loan arranged?

As bridging finance is often needed fast, experienced brokers will endeavour to get one approved as quickly as possible, with the funds available as soon as a few days.

Although a loan can be approved a lot quicker than finance through a traditional bank, brokers still need to input a significant amount of work to ensure the application is completed correctly and the process runs smoothly.

According to research conducted by bridging Trends, the average loan in 2019 takes just 51 days to complete, however, this will vary greatly depending on the broker, lender and loan requirements.

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At Ramsay & White, we endeavour to get bridging finance secured as soon as possible for our clients and have previously completed bridging loan applications within a matter of days.