100% Bridging Loans
Bridging loans offer flexible short-term financing options for property investors and developers.
In certain circumstances, these loans can provide up to 100% of a property’s value, giving you access to substantial funds quickly.
Whether you’re looking to purchase at auction, renovate a property, or expand your portfolio, bridging loans can be a useful tool.
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How we can help
At Respect Capital we understand that exploring the world of bridging finance can be overwhelming, and very time consuming.
That’s why our team of experienced finance brokers is here to guide you every step of the way. We’ll take the time to understand your unique financial situation and goals, then tailor a solution that perfectly fits your needs.
Whether you’re a seasoned property investor or a first-time buyer, we’ll leverage our extensive network of lenders and brokers to secure the most competitive rates and terms available.
We’ll handle all the paperwork and negotiations, leaving you free to focus on what matters most – making the most of your property opportunities.
Contact us today for a free consultation and let us help you unlock the potential of 100% LTV bridging loans.
What’s a Bridging Loan?
A bridging loan is a short-term financing option secured against property or assets. It’s designed to help you ‘bridge’ financial gaps quickly, often when buying a new property before selling an existing one. These loans are popular for property refurbishments, developments, or purchases that need fast completion.
Bridging loans typically last 3 to 24 months. They’re secured against your property, meaning the lender can take ownership if you don’t repay. While they offer quick access to funds, they come with higher interest rates than standard mortgages.
Related: How long can you have a bridging loan for?
How Does a Bridge Loan Work?
Bridge loans provide swift access to cash, letting you move forward with property transactions or projects without waiting for long-term financing.
Here’s how they typically work:
- You apply for the loan, providing details of the property you’re using as security
- The lender assesses your application and property value
- If approved, you receive the funds quickly – often within days
- You use the money for your intended purpose
- You repay the loan when your long-term financing comes through or you sell your property
Most bridging loans are provided by specialist lenders, some high street banks offer bridging loans but their criteria tends to be very conservative and rigid.
Remember, bridge loans have higher interest rates than standard mortgages. You’ll need a clear ‘exit strategy’ – your plan for repaying the loan at the end of the term.
What Can You Use a Bridge Loan For?
Bridge loans are versatile and can be used for various purposes:
- Buying a new home before selling your current one
- Purchasing property at auction
- Funding property refurbishments or conversions
- Developing land or property
- Meeting short-term business cash flow needs
Here are some specific examples:
- Converting an office to flats under permitted development rights
- Carrying out heavy refurbishments like extensions or loft conversions
- Renovating a property for rent or resale
- Developing a property to qualify for a residential or commercial mortgage
Bridge loans are particularly useful when you need to act quickly in the property market or when traditional lenders can’t meet your timescales.
explore bridging loansHow Much Can You Borrow with a Bridge Loan?
The amount you can borrow with a bridge loan depends on the value of the property you’re using as security. Most lenders offer loans based on a percentage of the property’s value, known as the Loan-to-Value (LTV) ratio.
Typically, lenders offer up to 75% LTV. This would be the maximum for a regulated bridge loan, one that is associated with a main residence. You can borrow 75% and need to have the remaining 25% as a cash deposit.
Borrowing at 75%, or below, will give you maximum choice of potential lenders.
However, some specialist lenders provide 80% bridging loans where they are unregulated and for investment properties.
This means:
- If your property is worth £500,000, you could potentially borrow up to £400,000 with an 80% LTV loan
- For higher-value properties, loans can range from £200,000 to £25 million
It’s important to note that higher LTV loans often come with higher interest rates, as they’re riskier for lenders.
Here’s a simple breakdown:
| Property Value | 75% LTV Loan | 90% LTV Loan |
|---|---|---|
| £250,000 | £187,500 | £225,000 |
| £500,000 | £375,000 | £450,000 |
| £1,000,000 | £750,000 | £900,000 |
The actual amount you can borrow will depend on:
- The lender’s assessment of your property
- Your exit strategy (how you plan to repay the loan)
- Your credit history
- The purpose of the loan
Some lenders may offer up to 100% LTV if you can provide additional security, such as other properties or assets.
Before taking out a bridging loan, it’s wise to speak with a specialist broker. They can help you find the best deal and ensure you understand all the terms and costs involved.
How do you borrow 100%?
100% funding is not widely available, as there’s a much larger risk for the lender.
- You will need additional property or assets to secure the loan against
- You will need a specialist broker to help you find a suitable lender
- The fees and interest rates will be higher than a lower LTV loan
To provide a quick example, let’s say you wanted to buy a property for £500,000 but required the full 500K to proceed. The normal maximum LTV for a lender would be 75%, which is a loan of £375,000.
This gives a shortfall of £125,000.
However, by utilising other assets the same lender can also lend the extra £125,000. This could be secured against any type of investment property or holiday home, providing there’s sufficient equity.
In some cases a lender may be willing to work with assets such as: jewellery, fine art, antiques, high value cars etc.
Understanding Loan-to-Value (LTV)
The Loan-to-Value (LTV) ratio is an important concept in the lending world. In essence, it represents the percentage of your property’s value that you’re borrowing. Lenders use LTV to assess the level of risk associated with your loan.
The LTV Equation:
LTV is calculated by dividing the loan amount by the property’s value and then multiplying by 100 to express it as a percentage.
The Impact of LTV:
A higher LTV signifies that you’re borrowing a larger portion of the property’s value. While this can provide access to more funds, it also translates to a higher perceived risk for the lender. Consequently, higher LTV loans may come with stricter eligibility criteria and potentially higher interest rates.
Quick Examples:
Scenario 1
You’re eyeing a property valued at £300,000 and plan to borrow £240,000. The LTV in this case would be 80% (£240,000 / £300,000 x 100).
Scenario 2
The property you’re interested in is worth £400,000, and you intend to borrow £280,000. This translates to a 70% LTV (£280,000 / £400,000 x 100).
Remember, understanding LTV is important when considering any property financing option. It directly impacts the amount you can borrow, the interest rates you’ll be offered, and the overall affordability of your loan.
Loan to value Calculator
Let our LTV calculator do the hard work for you.
Just enter the property price/value and the amount you wish to borrow.
The calculator will then show you what loan to value your proposed loan is.
How Easy is it to Get a 100% LTV Bridging Loan?
It's not that easy.
While 100% LTV bridging loans can seem attractive, they're not as readily available as lower LTV options.
75% loan to value bridge loans are the most common.
With higher loan to value percentages, the lender is taking on extra risk. For that they will require a higher interest rate and a really strong exit strategy. At 100% loan to value all lenders will want some additional security, either property or assets.
Your exit strategy is how you will pay them back during the loan term. This has to be well thought out and planned. It's possibly the most important part of applying for bridging finance.
Bridge lenders won't normally do a credit search or credit score, so if your credit history is a little chequered then this is to your advantage. However, this is not the case with a regulated bridging loan, where the lender has to take a greater interest in your financial status and affordability.
100% VAT Loans
When you buy a commercial property you are usually required to pay VAT on the purchase price, increasing the cost by 20%.
While you can reclaim this from HMRC, it is not included in your commercial mortgage, so could seriously affect your cash-flow for the following few months.
With a VAT bridging loan you can borrow 100% of the VAT bill, with repayment due when you receive your refund from HMRC.
A nice neat solution.
explore vat bridging loans