Mr and Mrs Peters of Macclesfield had agreed a discounted price for a new build property in Stockport having found a buyer for their own property. The...
Key Questions about GAP and Bridging Loans
How does a bridging loan work ?
Bridging finance is a very flexible form of short term funding and compared with conventional forms of finance it is very quick to organise and draw the money . Loans can be secured on either a first or second charge basis on residential or commercial property or on land and development sites with or without planning consent. In all cases a bridging loan will be secured and should be thought of as a very flexible short term mortgage. That said, to secure the loan it may be necessary to organise a valuation of the property offered as security and in all cases you will need a solicitor to represent your interests. (back to FAQ’s)
What is a Mortgage GAP loan ?
Mortgage GAP funding is a low cost form of bridging finance offered to clients who need funds associated with a residential home move. The GAP loan is a ‘status’ product and it is not available for investment properties, commercial situations or general fund raising.
It is used primarily where a client wishes to complete on a new property purchase before they have sold their existing home and it can be used for any purchase situation either in the UK or overseas if you are emigrating. The loan is secured on the property (or properties) being sold which can be in any location in the UK and Northern Ireland. The maximum loan available is up to 80% of the value of the property, the interest rate charged for a GAP loan is in line with a regular mortgage and the applicant should demonstrate that the GAP loan can be afforded ( alongside other committments) for a period of up to 12 months. GAP loans are entirely flexible with no minimum or maximum periods and no exit fees or penalties applied. (back to FAQ’s)
What does ' first or second charge' mean ?
If your property is currently mortgaged then that lender has the first charge on the property. To secure a bridging loan on that property we would take a second charge behind the principle lender. If your property has no borrowing against it we would secure on a first charge. (back to FAQ’s)
How much can I borrow on a bridging loan ?
The minimum loan that we offer is £30,000 and there is no maximum amount. Generally speaking we can lend up to 75% of the value of the property or properties being offered as security less any amount already secured on that property. For certain types and locations of property on a first charge basis we can loan up to 80% of the value of the property and if the property is a closed bridging loan we can offer more. (back to FAQ’s)
How long can I get a bridging loan for ?
Our bridging and GAP loans are normally put in place for a maximum of 12 months though the average length of our loan agreements is currently 3 months. There is no minimum term for any of the loans we offer unless otherwise stated. (back to FAQ’s)
How quickly can I get a bridging loan ?
We have previous completed on a bridging loan in 36 hours though this is not typical and we normally advise around 5 working days for a bridging loan and 10 days for a GAP loan. A key element of either type of loan is registering the legal charge on the property being offered as security. Your solicitor has a fundamental role to play and the speed of transaction is usually determined by how quickly they can respond to normal enquiries.(back to FAQ’s)
What is the difference between an 'Open' and a 'Closed' bridging loan ?
An 'open' bridging loan is a loan taken out when the repayment strategy is understood but the timescale is not confirmed. For example when a loan will be repaid from the proceeds of a property sale and the property is still on the market. A 'closed' bridging loan is a loan taken out when funding for the repayment is confirmed and a formal offer is in place. Using the same example the property used to repay the loan will have been sold and a completion date agreed. In many cases where the loan can be confirmed as 'closed' we are able to increase the amount of funds advanced. (back to FAQ’s)
What are the charges for a Bridging Loan ?
The general charges of our loans will be an arrangement fee, monthly interest charge, valuation charge ( for the property offered as security ) and legal fees. With standard loans we do not charge exit fees or early repayment charges and in all cases we will issue you an illustrative agreement in principle (AIP) clearly setting out all the costs with no hidden extras. To proceed with the loan process you will be required to agree to the terms of the AIP. (back to FAQ’s)
How is the interest rate calculated and charged ?
Interest rate on a bridging loan is calculated daily and charged monthly in arrears. On a GAP loan it is calculated daily and charged quarterly in arrears. In many cases the interest due on the loan can be ' rolled up' which effectively means you pay both the loan amount and the interest at the time the loan is repaid which can assist with cash flow. (back to FAQ’s)
Can I secure a loan against multiple properties ?
Yes we can secure a bridging loan or a GAP loan against multiple properties and frequently do. . (back to FAQ’s)
Can you secure a loan on a property we own overseas ?
If the property in question is in France or Spain we may be able to secure a bridging loan on such property. We have subsidiary companies in both countries. . (back to FAQ’s)
Will you lend in adverse credit situations ?
The general answer is yes, adverse credit including CCJ’s will not necessarily be a bar to providing a bridging loan. The Mortgage GAP loan is a status product and is subject to underwriter’s approval. With some bridging loans and all Mortgage GAP loans it may be necessary to carry out a personal credit check with your authority to do so. (back to FAQ’s)
Do you lend your own money ?
Yes, First Bridging is part of the White Rose Finance Group who are principle lenders. We do syndicate some loans with other lending partners and all our GAP loans are provided in this way.(back to FAQ’s)
Can you provide references from satisfied clients ?
Most definitely yes. We have significant numbers of satisfied clients who have been so impressed with our level of service that they have voluntarily offered to act as reference customers. Let us know if you would like to speak to such a contact.(back to FAQ’s)
How do I find out more about getting a bridging loan ?
For a no obligation discussion and friendly professional advice from a qualified member of our team simply call our York head office at local rate on 0845 838 8576. The office is staffed until 7.00 pm during the working week, outside of office hours please feel free to call our mobile service on 07730 065 192. Our advice is given freely and in confidence and we will be able to offer an immediate 'in principle' decision and confirm the offer in writing generally the same day.(back to FAQ’s)