How to use Brickflows bridging loan comparison tool?
Brickflow’s live bridging loan comparison tool is the quickest, easiest and most accurate way to compare bridging finance from across the market.
Here’s how it works:
1. ENTER your project criteria and model deals- It takes seconds to enter your property details & search for loans from banks, challenger banks, non-banks and specialist bridging lenders
- Find out exactly how much you can borrow on your project and how much it will cost
2. COMPARE loans from 50+ bridging lenders
- Compare max LTVs, rates, fees, deposit requirements & ROCE (Return on Capital Employed)
- Filter and sort your results, and shortlist your preferred loans
- Save your search and log back in later
3. APPLY directly from the platform with your intermediary or a Brickflow partner
- Get multiple same-day DIPs back (our record is 7 minutes!)
- With your intermediary, apply using Brickflow’s digital Smart Appraisal(™), the only tool that directly connects with lenders
- Lenders love a Brickflow application because it covers everything they need to know – but if one lender says no, apply to another with one click
- Your intermediary will manage your application and ensure you’re happy with the loan T&Cs
What is a bridging loan and how does it work?
Bridging finance is a short-term loan used by individuals or businesses to alleviate temporary funding gaps, typically between buying and selling or refinancing a property or purchasing properties or land that other funding cannot cover.
They are fast to arrange, provide immediate liquidity, and can be used in a wide range of commercial and residential property or land transactions. Businesses can also use bridging finance to upgrade equipment, machinery, or premises to increase business output.
Key features:
| Arrangement timeframes | Typically between 1 and 6 weeks, but in some circumstances, bridging finance can be completed in 3 days |
| Loan term | 1-24 months |
| Interest Rates | Starting from 8% (or 0.67% per month) |
| Loan sizes | Lenders on the Brickflow platform offer loans between £25,000 and £150 million |
How does a bridging loan work?
Bridging loans are secured with assets, typically the property you’re buying with the bridging loan, existing properties, or a combination of both. If you default on the loan, the lender could take possession of these assets.
Similar to development finance, income and good credit history are not key to securing a bridging loan. Lenders are more interested in the asset value and saleability, your experience and your exit strategy.
Typical exit strategies are:
- Selling another property (lenders love an exit with a completion date already agreed - this is a ‘closed bridge’)
- Selling the property that the loan is secured against after completing value-add work
- Refinancing on a traditional mortgage or commercial mortgage
- Refinancing/transitioning into development finance
- Re-bridging
What can a bridging loan be used for?
Bridging loans have come a long way since they were first introduced in the 1960s. They were originally intended to prevent the collapse of a property sale and were considered an absolute last resort.
Nowadays, whilst one of their primary uses is still to prevent a chain break, experienced property investors routinely use this flexible finance to widen their market opportunities and improve return on investment.
Common uses include:
- Purchasing or building a property before selling an existing home/ property
- Auction purchases
- Purchasing land without planning or only outline planning
- Purchasing properties ineligible for traditional mortgages (e.g. properties under £50,000, uninhabitable properties with no working kitchen or bathroom, or structural issues, properties with non-standard construction)
- Funding renovations that can be completed in a short time
- Transacting quickly on advantageous market conditions, like buying land at a reduced price
- Releasing equity from a property without re-mortgaging
- Upgrading business operations
If you think a bridging loan might be the right option for your next investment, but you want to know more, we can connect you with one of our preferred intermediary partners who specialise in bridging finance solutions. Get in touch today, or alternatively, compare bridging loans instantly on Brickflow’s live bridging loan calculator.
What to consider when comparing bridging loans
To find the best bridging loan, you have to compare bridging loans from across the whole of the market. It’s easy to fall into the trap of searching only on the basis of interest rates. Interest rates of course affect the cost of your loan, but there are many other factors to consider:
- Loan-to-value ratio: Usually bridging lenders offer a maximum LTV of 75% (on a gross basis, so interest & fees will be deducted, unless the loan is serviced) of the property (or site) value. With refurbishment bridging finance, lenders can offer up to 100% of the build costs as well as a loan to help purchase the asset. The LTV will depend upon the asset, the scope and scale of improvement works (if applicable), the exit, the loan term, and you as a borrower.
- Deposit requirements: Specifically determined by the LTV you secure - this should be one of your key considerations with any bridging loan comparison because it can be the difference of tens to hundreds of thousands of pounds. Do you have enough capital for a lower LTV? Do you want to use all your capital on one project?
- Loan Term: Bridging loans are short-term, usually 12 months or less, but some lenders will lend up to 24 months. Can you achieve your exit strategy within the agreed loan term?
- Lender Criteria: Is this your first property investment project? Are you a UK national living abroad? Do you have poor credit? Finding the right lender for your circumstances is essential - when you compare bridging loans on Brickflow we have extensive criteria filters so you can omit lenders who don’t meet your criteria.
- Fees and Charges: Bridging lenders typically charge a 2% arrangement fee, but it can vary. Some lenders charge early redemption fees if you exit the loan before the minimum term.
- Speed of Funding: How the lender is funded will have a big impact on how quickly they can arrange a loan. For example, high street banks are more heavily regulated in comparison to privately funded specialist lenders, so loan arrangement is typically slower. However some specialist lenders’ funding lines come from banks, so they will follow much of the same criteria and process. It’s something worth considering when you compare bridging loans, but it isn’t always easy to find out – your intermediary should be able to help.
- Interest: In addition to comparing interest rates, consider how a lender charges interest. Will they let you service the loan (pay monthly)? Do they charge interest daily or monthly? If interest is charged monthly, and you exit the loan part-way through the month, you will be charged for the whole month.
How to choose the best bridging loan for your needs?
To choose the best bridging loan for your needs, you must shop the market and determine what loans are available for your circumstances.
Brickflow’s live market search lets you instantly compare bridging loans from high-street banks, challenger banks, and specialist lenders. It is the quickest way to find the best bridging loan across the UK market.
Your search results will show you actual live borrowing options, so you know exactly how much you can borrow and how much it will cost you. It takes seconds to enter your property or site details and compare;
- Maximum loan size
- Net loan
- Deposit requirements
- Interest rates
- Arrangement fees
- Total lender costs & more.
You’ll also see profit outcomes, so it's the quickest, most efficient way to see if your deal stacks and if the property or site is priced right.
Run your numbers through our bridging calculator now to find the best bridging loan for your needs.
If you want to find out more about bridging loans and how they work, head to our dedicated bridging loans page.
Pros and Cons of a Bridging loan
Bridging loans are becoming increasingly mainstream, with property investors and developers now using them as a key financial tool for their projects.
But as well as the advantages of bridging loans, it helps to be aware of the potential downsides.
Pros of a bridging loan
- Fast-arrangement time; it can be as quick as a few days
- Flexible - can be secured against commercial or residential property as well as land with or without planning; rarely carries early repayment charges; bad credit history can be accepted; can be regulated or unregulated; ability to negotiate on rates, fees, eligibility and loan covenants via your broker
- Creates market opportunities, such as buying at auction, buying unmortgageable properties or acting as a ‘cash buyer’ to secure a sale faster
- Interest charges tend to be rolled up and paid at the end of the bridging loan, so can be accessible for borrowers with low income or cashflow issues
Cons of a bridging loan
- Bridging loans tend to cost more than other types of borrowing, such as a Buy-to-let mortgage or homeowner mortgage
- Specifically for short-term borrowing, so if you don’t achieve your exit plan within the agreed term, the default interest rate can be high if you don't agree an extension
- Most bridging loans are arranged with retained interest, which means it’s added to the loan and paid on redemption, but the interest is compounded - i.e. you pay interest on the interest.
- Bridging loans are asset-secured and require a personal guarantee (if borrowing through a corporate entity), meaning the borrower has personal liability for the debt. In the event of a default, the lender can repossess the assets or realise the guarantee.
We cover more details in our article on the pros and cons of bridging loans.
Alternatives to Bridging Loans?
Bridging loans can offer solutions for many property transactions, but it’s worth taking time to decide if they're the right funding for your circumstances. Other types of funding could be more suitable, longer-term, or cheaper borrowing.
Some alternatives to bridging loans include:
- Residential mortgage: A long-term loan to purchase a property you intend to live in.
- Self-build mortgage: Financing specifically for constructing your own home.
- Buy-to-let mortgage: A long-term investment loan to purchase a property you intend to rent out to tenants.
- Business loan: Financing to meet your business's needs, such as equipment or working capital.
- Development finance: Short-term, tailored funding to purchase land or property and fund ground-up development, property conversion or extensive refurbishment work.
- Commercial mortgage: A long-term loan to purchase or refinance commercial property, either to rent to a third party or as your own business premises.
Use Brickflows comparison tool to find the best bridging loan deal
If you’re ready to compare bridging loans, enter your property details into Brickflow’s live comparison tool and instantly access the breadth of the UK bridging market. The comparison tool provides users with the opportunity to make sure their deal stacks, providing a detailed level of due diligence that is not available across any other platform.
It takes just a few seconds and enables you to find the best bridging loan for your needs, saving you both time and money.
Are bridging loans considered high-risk?
As with any type of large financial commitment, there are inherent risks and any loan that is secured against your property carries the risk of that property being repossessed by the lender.
Generally, bridging loans would be considered more high risk than, for example, a residential mortgage, because they have higher rates and charges but also because of the short timeframe you have to achieve your exit strategy.
If you plan to repay the bridging loan by selling the property the loan is secured against, or another asset, but the market conditions have deteriorated or you experience delays with planning or refurbishment, you can incur even higher default loan rates if the lender doesn’t grant you an extension, or an expensive re-bridge.
Do lenders provide bridging loans to those with bad credit?
Yes, it is possible to secure a bridging loan with bad credit. Lenders are primarily concerned with the asset and its desirability, your plans for the property, how you will repay the loan (exit strategy) and your experience in similar property investments.
However, having bad credit can limit your lending options as not all lenders will accept bad credit applicants or can affect the rate and LTV you are able to secure
How much equity do lenders typically need for a bridging loan?
The equity required for a bridging loan depends on the value of property the loan is secured against and the lender's maximum loan to value ratio. For bridging finance on residential properties, the LTV can be as high as 75% on a gross basis (so interest and fees will be deducted, unless you've agreed to service the loan), meaning you would need between 25% and 40% of the purchase price + purchase costs (around 5%) in equity. For commercial properties, the maximum LTV is more typically 65%.
In some circumstances, lenders will accept additional security (a 1st or 2nd charge over another property) to act as a portion of the deposit. Your intermediary can help you to work with the lender and structure your debt in a way that suits your needs.
What’s the difference between first-charge and second-charge bridging loans?
A first-charge bridging loan is the principal loan secured against a property, i.e. the loan you used to fund the property purchase.
A second-charge bridging loan is a loan secured against a property that already has outstanding debt, such as a mortgage. In this case, the mortgage lender is the first charge and will be paid first in the event of a default. Second-charge loans are higher risks for lenders, which is typically reflected in higher rates and charges.
How much do bridging loans generally cost?
As well as interest charges, bridging loans carry arrangement fees, and possibly exit and redemption fees. On top of that you will have to pay broker, valuation and legal fees (yours and the lenders).
We cover the costs of a bridging loan in a lot more detail in our article How much does a bridging loan cost?
The total costs depend on your loan and your circumstances. The quickest way to find out the actual costs of a bridging loan is to search for loans on Brickflow’s live bridging loan calculator.
How long does it take for a bridging loan to be approved?
At Brickflow, you can search and compare bridging loans instantly and then apply directly from the platform with your intermediary or a Brickflow partner.
When lenders receive Brickflow’s digital applications, they return their Decision in Principle within minutes. Our record so far is 7 minutes.
After looking over your DIPs and submitting your application for your preferred loan, completion can be within a few days. However, a more typical timeline is around 2 weeks for loan drawn down – the speed is primarily dependent on how long the lender’s valuer takes to complete their report and how long the solicitors take to complete their searches. If a lender works with an automated valuation model (AVM) and accepts title insurance (therefore no searches are required) then completion can be as quick as a few days.
If your key criteria is to secure a fast bridging loan, speak to your intermediary about the best lender to work with.
For regulated bridging loans (when the loan will fund a residential property purchase that you or your immediate family will live in) there is more due diligence and paperwork involved, so completion times will take around 4 to 6 weeks.
Find out what factors can delay or speed up your application in our article How long does it take to get a bridging loan?
How can I calculate how much I can borrow?
The easiest, quickest and most accurate way to calculate how much you can borrow and how much it will cost you is by using Brickflow’s live bridging loan calculator.
It will take you just a few seconds and give you up-to-date borrowing options from 50+ bridging lenders.
How is bridging loan interest calculated?
Interest is calculated on a monthly gross loan basis, so whatever the interest charges are, they are applied to the purchase loan, build loan, interest, and arrangement fee.
You will only pay interest for the duration of your loan, even if you exit the loan earlier than the originally agreed term.