FAQs: Bridging loans
CA bridging loans are flexible short-term solutions for investors and property developers. Typically, our customers are buying property that needs refurbishment or an extension to its lease, neither of which is likely to be acceptable to a High Street lender. Otherwise, our customers may be looking at a completion timeframe that is too short for High Street lenders.
What is bridging finance?
Bridging finance is a short-term loan which can be secured against residential property, commercial property, or land. CA bridging finance is suitable for property investors and developers who need funding quickly. CA’s Bridging Finance cannot be used by owner-occupiers. We do not lend on properties where the applicant or a family member does or will reside.
What are bridging loans used for?
- The purchase of properties which have potential for future development. CA also has bespoke products should funding ultimately be required to develop the property.
- Auction purchases. You can contact CA before the auction. Our experienced Lending Managers can offer you a quick decision in principle and provide you with Heads of Terms prior to the auction.
- Properties that need refurbishment or redevelopment prior to onward sale or to be retained as an investment.
- Properties that are already owned and capital is required, to repay another lender, for a lease extension, or to provide funds for further investments.
- Properties/land with planning permission for a residential or mixed use scheme. CA also has bespoke products should funding ultimately be required to develop the property.
- Commercial property subject to meeting CA criteria.
How much can I borrow on a bridging loan?
We can lend from £50,000 to £5,000,000. Larger loans can be considered by exception. Dependent on the type of property being offered as security, CA will lend up to 70% of the 180 day market value of the property.
How long can you have a bridging loan for?
Bridging loans are usually available for 9 months. If your bridging loan is due to expire and is not to be converted to another CA loan, subject to board approval, we are usually able to extend the term. We have other longer term products for development and investment. If planning has been granted for development post purchase or the property is now income producing, you may choose to convert the Bridging loan to another CA product. These loan products have a different interest rate and fee structure.
How does a bridging loan work?
To apply, you will need to call us on 020 3857 6350 to speak to one of our lenders to discuss your requirements or email us on email@example.com. If the requirement meets our lending criteria, we will start the bridging loan process:
- Initial application
- Heads of Terms
- Due diligence, KYC (know your customer) and account opening formalities
- Panel valuer quotes
- If the applicant decides to proceed, solicitors and valuers are instructed (loans remain subject to formal approval at this stage)
- Formal approval process
- Once approved, we issue the formal letter of offer.
What type of properties are accepted as security?
- Residential houses and flats (tenanted or vacant)
- Commercial property subject to meeting CA criteria
- Freehold blocks
- Land with planning consent for residential development
- Mixed-use units
How much interest is charged, and do I have to service interest each month?
Interest rates for bridging loans range from 0.75% per month to 0.85% per month dependent on the property being offered as security and the loan-to-value. Interest can be serviced monthly or an interest provision can be deducted from the loan amount to cover interest for the period. If interest is serviced monthly, we require a Direct debit to be set up on completion. Rates are subject to change and will increase or decrease in line with movements in Bank of England Base Rate. Rates are subject to an agreed minimum rate. Our bridging loans do not attract commitment fees or redemption fees.
*However, rates are subject to change and will increase or decrease in line with movements in Bank of England Base Rate. Rates will be adjusted on each monthly anniversary of the facility. The overall cost for comparison is 10.6% APR
What happens when a bridging loan expires, and can a bridging loan be extended?
Before your loan is due to expire, we will request an update on your circumstances. If required, we will seek board approval to extend the term of your loan.
Can I get a bridging loan to buy land?
We can provide a bridging loan on land which already has planning permission for residential use.