Speed
The process of getting a mortgage or other types of lending can take at least several weeks and sometimes, months to complete. Lenders will need to review your application, approve you for a loan, onboard you and ensure you meet the necessary regulatory and compliance rules that will allow them to lend. In general, this process can take a least 6-8 weeks, however it may be longer if your circumstances are more complicated.
Bridging lenders will meet the same regulations (ensuring you meet compliance, AML, credit and onboarding requirements) but despite this, the process moves much faster. As a result, getting a bridging loan is much faster than completing a mortgage, which is essential if you require finance quickly.
Privacy
Not all bridging finance is regulated, and there are lots of smaller, nimble lenders operating in the space. This will speed up how quickly you can secure the loan and there will be a greater degree of privacy – lenders are more focused on the deal, exit and security in question than all the details of your financial background.
Flexibility
Generally, bridging finance lenders are smaller and more flexible than larger lenders that operate in the mainstream lending space. This means decisions are taken quickly and it is easier to get in front of decision makers. Enness usually has personal and close relationships with these lenders. Your broker will be able to build a loan with lenders based on your financial background and scenario. There is more flexibility, lenders make decisions quickly and deals reach completion very fast.
Rates
Generally speaking, bridging lenders are non-bank lenders, and they are responsible for setting their own rates and fees. While this seems obvious, it can be useful for borrowers because it means bridging lenders are less influenced by increases to the base rate.
Typically, for example, banks pass on interest rate increases directly to borrowers who have a flexible rate – this can happen as soon as a day after the Central Bank raises the rate. Bridging works differently. Lenders will fix rates up front, which means that potential base rate increases during the duration of your loan will not change what you are liable to pay.
Large Loans
You can borrow a significant amount using a bridging loan. Most lenders can lend around £2-5 million (LTV of about 70-75% is usual in a straightforward deal, provided your finances are in good order and you have a significant net worth). However, other lenders will offer significantly more – bridging loans of £10 million plus are becoming more common.
Lenders that operate at the top of the market are usually specialists in large loans, and most are set up to lend large amounts. Often, it will be possible to secure a large bridge loan against a single, amounts against a single high-value property.
Ease
Some borrowers will decide to opt for bridging finance when they want to secure a loan quickly with as little hassle as possible. Applying for a loan will always require oganisation and an investment of time, but bridging finance is, often, simply faster and less complicated to arrange than other types of finance, like a mortgage. This is because lenders are principally focused on your exit and the asset. As long as you are creditworthy and can demonstrate you have a good plan of action and plan for paying back the loan, bridging can be a less burdensome type of finance to arrange than alternative financing products, which take longer to arrange and require more paperwork and information. Many borrowers, particularly high-net-worth individuals, will happily pay a premium to benefit from lending that is more pragmatic and can be closed as quickly as possible.
