What to expect when working with a bridging loan broker
Bridging Loan Hub is a broker which is designed to helping you find the best bridge finance for you and your requirements. The main advantage of working with a broker is that you get a full range of products from one place, rather than having to go to each lender separately trying to get the best deal. In addition, the broker only receives a fee if the loan application is successfully funded, so they will be determined to helping you find the best terms and lender most likely to accept your application.
We highlight what you can expect from working with Bridging Loan Hub and similar brokers in the industry.
Once you fill in your details on our homepage or product page, you will receive a call back from someone in the SPF Short Term Finance team. This is our partner who are one of the most established mortgage brokers in the UK.
A team member will call you back to confirm a few details and understand your requirements better, so that we can be in the best position to place you with the lender who is most likely to successfully approve your loan application and deliver the terms you require.
Initial Application Form
Provided that your phone call with our staff member was successful and we can help you proceed, you will need to complete a short application form which requires you to fill in some basic details including:
- Loan purpose
- Loan amount and term
- Address (both current and address of property)
- Any other relevant information about your existing and future property
This information gives us an essential overview of your requirements and acts as a foundation for the loan that you wish to apply for. Assuming this meets the criteria of our initial lenders, we will pass this onto the next stage.
Your loan application will be put through a filter and returned with a number of indicative quotes from the lenders that we work with. Each lender has their own criteria and amount that they will allow you to borrow and the rate they charge. As a bridging loans broker, we can formulate this quickly and you will be given a quick overview of the loan amount and rates. Here is an example below:
Masthaven 80% LTV – £400,000 – 15 months
MT Finance 70% LTV – £350,000 – 14 months
Precise Mortgages 70% LTV – £350,000 – 8 months
Roma Finance 70% LTV – £350,000 – 7 months
As a borrower, you can decide which lender you would like to pursue or all of them in fact. You can then get your paperwork ready in order to proceed.
How to Proceed
The next step before we proceed is always a valuation of the property which determines how much it is worth according to today’s market. The cost of a survey will depend on the size of the property, ranging from £300 to £1,200 to larger, more complex builds. The survey is always carried out by a RICS qualified surveyor and can typically be arranged within 2-4 days of enquiring.
The property’s valuation is essential to ensure that it stacks up with the figures that you have provided and this may coincide with what the lenders have offered or cause them to change their loan offers.
Assuming everything is good to proceed, you are in a position to introduce your solicitors to the lender and allow the parties to liaise. To be approved for a bridging loan, you will need to provide additional proof of identity to the lender including your:
- photographic identification
- two proofs of current address (of over 3 months) such as a gas bill and council tax bil
Your solicitor will then prepare the mortgage deed and whilst some bridging applications can take a few weeks, there are many which can be arranged in just a few days.
What Fees You Can Expect
As a customer working with a bridging loan broker, it is important to know what other fees to expect with your application:
Broker fees: Depending on the broker that you use and the lender, there is a broker fee of 1% or 2% of the total loan value. For a loan of £500,000, this will therefore come to £5,000 to £10,000. This might seem like an additional cost of working with a broker, however, the broker may also help you get a lower interest rate and better chance of approval earlier on – so you may save money overall.
Arrangement fees: A lender typically charges arrangement fees which relate to the organising of the loan, the work of their solicitors and their administration. The cost of this is typically also around 1% to 2% and depending on the lender, may be a requirement before the loan is funded or it is rolled up into the full loan amount.
Valuation fees: The surveyor you use or is allocated to you will charge around £300 to £1,200 for carrying out a survey of the property. You can use your own surveyor provided that they are RICS qualified, however, a lot of bridging lenders will typically provide a surveyor for you.
Solicitor fees: Naturally, your solicitor is very involved with arranging the mortgage deed and receiving the funds from the loan. You will therefore have to incorporate your solicitor’s fees into the mix and obviously having an expensive professional may impact the margins and your return on investment.
Early repayment fees: Bridging loans typically come with early repayment fees, with higher penalties in place if you want to end the loan agreement within the first few months. With this in mind, you need to weigh up the costs of repaying early or letting it run for a few more months and paying the interest.