Regulated Bridging Loans

What can you use a regulated bridging loan for?

As the name implies, a bridging loan bridges the gap in your funding. This allows you to go ahead with your project while arranging longer-term finance, such as a mortgage, or until another source of funding becomes available, such as the maturity of an investment or receiving an inheritance.

You can use a regulated bridging loan for various purposes. These include:

• Buying a new home before your current one is sold
• Continuing with your property transaction despite a break in the chain
• Raising capital
• Buying a property at auction
• Refurbishing a property
• Funding a lease extension
• Preventing the repossession of your property
• Funding a divorce settlement, such as buying your ex-partner out of the jointly-owned property

How much can you borrow with a regulated bridging loan?

The amount you can borrow for your FCA-regulated bridging loan depends on numerous factors. These include the amount you want to borrow, the loan-to-value (LTV) ratio that the lender is prepared to offer and your exit strategy. The lender’s main concern will be your exit strategy. This is how you intend to repay the loan. For example, using the proceeds from the sale of a property, whether that’s the one you’ll be using as security or a different one. Another option is refinancing to a mortgage. If you intend to repay the loan by selling a property, the lender won’t require you to have a minimum income. If you wish to refinance to repay the loan, your income will need to be adequate enough to meet the criteria for this.

Loan amounts generally start at £25,000 and can run into the millions. Regulated bridging loan lenders typically offer LTVs of up to 70% or 75%. This depends on the strength of your application, such as the property used as security, your personal circumstances and your intention for the bridging loan. Some lenders consider higher LTVs of up to 100% provided that you can offer additional security.

Eligibility criteria for a regulated bridging loan

To be eligible for a regulated bridging loan, you usually need to be 18 or over. There is no maximum age unless you choose refinancing as your exit strategy. In this case, some lenders set an age limit, such as 75 years old. As there’s no maximum age when selling a property for your exit strategy, this means you can benefit from a bridging loan if you’re retired.

You can apply for a regulated bridging loan as an individual, a partnership, a limited company, an LLP or an offshore company. This type of finance is available to you whether you’re a UK resident, a foreign national or a non-UK resident.

You need to provide a property as security. This must be used as – or intended to be used as – your home or that of a family member. As mentioned earlier, a plot of land that you intend to build your own home on can be used as security.

Get in touch with our bridging loan experts

At Trinity Finance, our mortgage brokers are ready to discuss your needs for short-term bridging finance. Based in Kent, London and Edinburgh, they can check your eligibility and ascertain how much you can borrow for a regulated bridging loan. When you’re happy to proceed, they’ll process your application quickly to ensure that you receive the funds within a short time frame. Just give us a call on 01322 907 000 to benefit from a fast regulated bridging loan. If you prefer, send an email to us at info@trinityfinance.co.uk or an enquiry via our contact form. We’ll reply to you with further details of the bridging finance available to help fund your time-sensitive project.

Interest rates for regulated bridging loans

Regulated bridging loan rates can be fixed or variable. With a fixed rate, you can rest assured that it won’t change throughout your loan term. A variable rate, on the other hand, may fluctuate. As this type of loan has a short term, however, there is less risk of fluctuations compared with a loan that’s arranged over a longer term.

The rate charged is based on different factors. These include the type of property to be used as security, the property’s condition and location, the amount you wish to borrow and for how long, your intention for the loan, the loan-to-value ratio and whether this is a first or second charge bridging loan.

The interest charged is usually rolled up. This means it is added to the loan amount and you repay it when the loan is repaid. This saves you from having to make monthly repayments. Some lenders will allow you to make monthly interest payments. In this case, you need to prove that you can afford to do this. Let your mortgage broker know if you prefer this option so that they can approach the right lender on your behalf.

Other costs involved with a regulated bridging loan

As well as paying interest on the loan amount, there are additional costs to factor in. These include:

• An arrangement or facility fee. Charged by the lender, this covers the setting up costs of your loan and is usually added to it. The fee is typically 2% of the loan amount.
• An administration fee. This fee is charged by the lender to cover their paperwork costs.
• A valuation fee. This covers the cost of a valuation, which has to be carried out on your property by a surveyor before the lender can approve your bridging loan.
• Legal fees. You’ll need to pay your own legal costs as well as those of your lender.
• An exit fee. When you redeem the loan, you may be charged an exit fee, depending on the lender. This tends to be between 1% and 2% of the loan amount.

Repaying your regulated bridging loan

As mentioned earlier, you have to provide your lender with an exit strategy detailing how the loan will be repaid. This can be from the sale of a property, for example, or refinancing. Whichever option you choose, the sooner you can repay your bridging loan the better. This is because you will save on the interest charges. You don’t usually have to pay an early repayment charge so, overall, the cost of taking out the loan will be lower the quicker you can repay it.

The difference between regulated and unregulated bridging loans

Whilst a regulated bridging loan is secured against your home, an unregulated bridging loan is secured against a commercial or investment property. As well as many of the uses detailed above for a regulated bridging loan, you can also use an unregulated bridging loan for other purposes. These can include purchasing a property as a buy-to-let investment, increasing your property portfolio, buying an asset for your business and even starting a new business.

Regulated bridging loans are regulated by the FCA, ensuring that you have consumer protection. Lenders have to adhere to certain criteria and often have to be more stringent with their checks on borrowers. This means that unregulated bridging loans can be more flexible but you won’t have any protection from the FCA. An example of their increased flexibility is that non-regulated bridging loans can have a longer term length, such as up to 36 months. Not all lenders are authorised by the FCA so fewer regulated bridging loans are offered than unregulated ones.

Don’t worry if you’re unsure of which bridging loan type you need. Our mortgage brokers will discuss your circumstances as well as your plans for the loan to ascertain this. As experts in regulated and unregulated bridging loans, they will then find the best deal available for you.

The benefits of regulated bridging loans

We’ve summarised the benefits of regulated bridging loans here for you to see at a quick glance.

• The FCA provides you with consumer protection. Lenders have to meet particular regulations and standards and you’re provided with protection should these not be met.
• You have fast access to the funds you need. The application process is quick and the funds have a fast turnaround time.
• You can borrow a large sum. Regulated bridging loans usually start at £25,000 and the majority of lenders offer loans of up to £5 million. Specialist lenders, however, can provide much larger bridging loans. These can extend up to £1 billion, for example.
• The lending criteria are flexible. Bridging loan lenders focus on the property you’re providing as security and your exit strategy rather than your income and credit rating.
• Different types of property are considered as security. Lenders accept freehold or leasehold properties as well as plots of land as security for regulated bridging loans. Unmortgageable properties or those with a non-standard construction are also accepted.

Boost your finances quickly with a regulated bridging loan

When you need a fast financial solution for your project, just give us a call on 01322 907 000. Our mortgage brokers are ready to ascertain how much you can borrow and process your application quickly. At Trinity Finance, we work extensively with specialist lenders and private banks offering bridging finance. This allows our mortgage brokers to search for the most competitive rates and flexible terms to suit your needs. You can then rely on a fast turnaround time for the funds to be transferred to you.

For more information about regulated bridging loans in London, Kent and Edinburgh, send an email to us at info@trinityfinance.co.uk. Alternatively, send an enquiry to us via our contact form. One of our bridging finance experts will reply to you as quickly as possible.

Get expert guidance on shaping your new build home insurance policy

Our mortgage and protection advisers, based in Kent, London and Edinburgh, are here to help you decide on the right level of cover needed for your new home. They can advise you on how to work out the value of both your buildings and contents insurance cover and ensure you’re aware of the policy inclusions and exclusions. Your new build home insurance policy will be tailor-made to meet your protection needs, including any extra add-ons you require.

To discuss the options available to you in more detail, just give us a call on 01322 907 000. We’ll find the best new build home insurance for your requirements, giving you peace of mind that your home is financially protected. If it’s out of office hours, send us an email at info@trinityfinance.co.uk or an enquiry via our contact form. We will reply to you with further information on how to financially protect your home and its contents.

How much does new build home insurance cost?

The cost of your new build home insurance cover depends on a few factors. The first is whether you take out both buildings and contents insurance. The second is whether you opt for any additional cover. Thirdly, the rebuild value of your home affects the cost, which we’ll detail below.

The rebuild value

If the worst happened and your home was destroyed, the rebuild value is how much the insurer would need to pay out for it to be rebuilt. This amount would have to cover all of the materials, professional fees and labour costs involved. The rebuild value of your home is not the same as its market value. The latter includes the cost of building your home and the value of the land it has been built on as well as allowing for your home’s location, the local amenities and other factors. Therefore, the rebuild cost should be lower than the market value. It is usually based on:

• The size of your property
• The type of property you have
• The age of your property
• The building materials used
• Whether it’s a listed property
• Whether it’s at risk of subsidence
• If it’s located in an area with a high crime rate
• If it’s located in an area that’s prone to flooding

Whilst you don’t want to overestimate the rebuild value of your home, it’s important not to underestimate it too. Ask a chartered surveyor to provide you with an estimate for the rebuild value so that your home is insured for the correct amount.

Benefit from cheaper premiums

There are a few ways to gain from cheaper premiums when getting home insurance on a new build.

• Take out a combined policy: As mentioned earlier, it’s usually cheaper to have combined buildings and contents insurance cover rather than paying for two separate policies.
• Pay annually: If you choose to pay monthly premiums, you will have to pay interest on them. By paying annually, you save on the interest charges.
• Protect your no claims discount (NCD): The longer you refrain from making a claim, the more favourably the insurer will look on you and they will likely offer you a discount on your premiums.
• Pay a higher voluntary excess: Compulsory excess is payable whenever you make a claim but you can also pay a voluntary excess amount in addition to this. Usually, the higher the amount you agree to pay for your voluntary excess, the cheaper your premiums will be.
• Don’t auto-renew: Rather than allowing your new build home insurance to automatically renew, contact our protection brokers before your cover expires. They will check your circumstances and search for more competitive deals to help you to save money on your premiums.

Safeguard your home with new build home insurance

Your new home awaits you so make sure it’s financially protected, both outside and inside, with new build home insurance. At Trinity Finance, we help you ascertain the right amount of cover needed should your home and possessions become damaged or even destroyed in an unexpected event.

Our mortgage and protection brokers – located throughout Kent, London and Edinburgh – can guide you on your property’s rebuild value and how to work out the value of your belongings. They will explain the different types of cover available for both the buildings and contents aspects of your insurance. They will also help you to decide if any extra cover is needed, such as personal possessions or legal expenses cover.

Simply give us a call on 01322 907 000 to benefit from the best home insurance for new builds at an affordable price. If you prefer, send your details to us by email at info@trinityfinance.co.uk or via our contact form. One of our protection consultants will reply to you as quickly as possible with more information. As well as new build home insurance, we offer a range of mortgage and protection services that provide financial protection for you and your loved ones.