Looking for some answers? Here are some of the most frequently asked bridging loan related questions that we are asked. If you don't find the answer to your particular question then please get in touch.
Loan to value is the loan amount calculated as a percentage of the security value.
This is the period of time for which funds are borrowed - or, the lifespan of a loan.
The 'gross' loan amount is the total borrowing, including all fees and interest. The 'net' loan amount is the amount available for your chosen purpose once all fees and interest have been deducted from the total borrowing.
These are various minimum/maximum parameters of a loan that need to be adhered to - e.g. loan amount, loan term, LTV, etc.
This is the way in which you will exit the loan at the end of the term. Usually either sale, or refinance.
Security is the type of asset or property utilised as collateral for the loan. Property types can include residential, commercial, semi-commercial, land, etc. If you default on the loan, the security offered will be at risk of repossession to protect the lenders interests.
A loan would be classed as in default if the loan agreement has not been adhered to. This occurs when interest is not being satisfied or the amount borrowed is not redeemed by the agree loan term.
This is where an applicant does not have to provide evidence of affordability for the loan in order to service the amount borrowed.
Serviced: monthly payments are made during the term of the loan in order to partially satisfy the debt, with the balance coming from the agreed exit strategy.
Rolled-up: the total amount owed increases by the agreed interest rate for each month the loan is taken. There are no monthly payments. The loan total (interest and principle) is paid in full at the end of the agreed term.
Retained: interest due for the term of the loan is calculated from the outset and deducted from the gross loan. No monthly payments are required.
Most bridging loan applications will require a valuation to take place on the property offered as security to protect the lenders interest.