Bridging finance offers convenience and flexibility when you need funds quickly for a property transaction on a short-term basis.
You may want to buy a property at auction, for example, and prefer to have the funds in place to meet the short completion deadline while your long-term finance is being arranged. You may have had an offer accepted on a new home but are still trying to sell your current home. A bridging loan in this case allows you to proceed with your new purchase so that you’re not stuck in a property chain. Or you may need a quick injection of funds to complete a renovation project.
Whatever your reason for arranging bridging finance, you may be wondering — is a bridging loan secured?
Do you need security for a bridging loan?
Yes, as part of the criteria to be approved for a bridging loan, you need to provide some form of security. Property is typically used as security but various other assets can be used. The type of security you provide will depend on various factors. These include the lender’s requirements and what you intend to use the loan for.
What is a bridging loan secured against?
As a type of secured loan, you need to provide the lender with an asset. This tends to be the property or land you’re buying but other types of high-value assets can also be used. Bridging loans can be regulated or unregulated and these affect the property that’s to be used as security.
Regulated bridging loan: A regulated loan is secured against a property that you or an immediate family member live in or intend to live in as your main residence. You or the family member have to occupy at least 40% of the property.
Unregulated bridging loan: This tends to be used for commercial or investment properties or other non-residential transactions. As such, it’s secured against a property that is not to be used as your residence. For example, a buy-to-let property or commercial property can be used as security.
Bridging loan lenders are much more flexible when it comes to using properties as security than those approving mortgages. Residential, commercial, semi-commercial, freehold and leasehold properties are all acceptable as well as development projects. Some properties won’t be considered suitable as security for mortgage purposes, such as those that are in poor condition or have a non-standard construction. All properties, however, are considered as security by lenders for bridging loans.
Other asset types
As mentioned above, property isn’t the only form of security accepted for bridging loans. Land and building plots are also acceptable forms of security as well as other high-value assets. These can include:
- High-value vehicles
- Boats
- Artwork
- Jewellery and watches
- Plant machinery
- Commercial equipment
This list isn’t the full extent of the assets that can be used. If you have an asset or multiple assets that you’d like to use as security, speak with our bridging loan brokers. We deal with specialist lenders who offer flexible lending criteria, including the types of assets they accept.
Benefit from a personalised approach to bridging finance
Are you considering a bridging loan to raise funds quickly so that you don’t miss out on an opportunity? Give our mortgage brokers a call on 01322 907 000. They’re ready to discuss your circumstances, needs and goals before tailor-making your application.
Well-versed in bridging finance, they can approach the lender most suited to your case and negotiate for the best deal on your behalf. As a fast and flexible funding solution, our brokers provide the expertise needed to put the right type of bridging loan in place exactly when you need it.