Updated: April 19, 2022

Large Bridging Loans

Looking for a large bridging loan? There are plenty around! Find out the typical rates, lenders and exactly what you need to get one in our expert guide.

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Pete Mugleston

Author: Pete Mugleston - Mortgage Expert

Updated: April 19, 2022

If you’re looking for a short-term cash flow solution to fund a big property purchase or renovation project then a large bridging loan could be just what you need.

In this article we’ll look at what large bridging loans can be used for, the key things to consider before you commit and why a specialist broker is a must if you’re applying for one.

What is considered a large bridging loan?

There is no official definition of what specifically constitutes a large bridging loan. It’s really down to the discretion of the individual lender, although many apply an arbitrary threshold of £1 million when talking about high value bridging finance.

If your bridging loan is considered large then it will likely mean more due diligence as well as a more flexible, case-by-case assessment process.

Unlike with traditional mortgages, your income and your credit score are less important. Instead lenders are looking primarily at what collateral you have to back the loan, and how you intend to repay it, so they’ll want to see a very clear and strong exit plan. If you’re looking at a large bridging loan for property development for example, a good track record in developing properties will give a lender more confidence in your application.

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Uses for large bridging loans

Larger bridging loans are normally associated either with high net worth individuals or commercial developments, and can be used for anything that requires a hefty short-term investment with a clear end date.

The key thing is that you have a solid exit strategy, usually the pending sale of another property, the sale of the new property or premises after development, or securing a mortgage. It may be that you simply don’t have time to get a mortgage in place or it could be that you’re buying a property that’s currently uninhabitable and so not eligible for a mortgage until you’ve undertaken refurbishments.

Examples include:

  • The purchase of a luxury residential property while the sale of an existing property goes through
  • Buying at auction, where a traditional mortgage can’t be arranged quickly enough
  • Adding to an investment property portfolio while waiting on another transaction to free up cash
  • Property developments e.g. buying an old building and converting it into apartments
  • The development of office complexes or business premises

How a broker can help

Using a specialist bridging finance broker is vital when it comes to securing a large bridging loan. Most of the lenders offering these high value loans, particularly those lending to commercial projects, are not regulated by The Financial Conduct Authority, therefore they’re classed as unregulated. So, without the help of someone with in-depth expert knowledge you simply won’t be able to access the whole of the market and get the best deals.

Large bridging loan applications are typically assessed on a case by case basis and there won’t be a ‘one rate fits all’ policy. Your broker can help you explore all of your options, including looking at things like securing your loan against a small portfolio of properties rather than one, and then act as a negotiator on your behalf to get you the best possible terms.

Given the high interest rates on bridging loans, the smallest reduction in rates can mean saving huge amounts of money on a large loan, so it really is worth it.

Which lenders offer large bridging loans?

High street banks are not the place to go for large bridging loans. Most of the lenders willing to offer this type of finance will be unregulated, non-traditional lenders – not the sort of organisations you find through a quick internet search.

Many of them are bridging loan specialists, focussing specifically on short-term finance for residential or commercial property development. They work on a bespoke basis and will likely be more flexible than traditional lenders, especially if you’re using a broker.

What are the costs and typical rates involved?

The main thing to remember when considering a large bridging loan is that it’s expensive, not just in terms of the interest you’ll pay – which is calculated monthly – but also the additional costs. Many people consider bridging loans a last resort, but if it’s a good fit for you just make sure you’re very clear from the start of the full cost.

Let’s take an example of a £3 million bridging loan, taken over 12 months, with a LTV of 75% and a monthly interest rate of 0.67%, which would be fairly typical at the time of writing.

Monthly interest on this would be £20,100, meaning you’d pay £241,200 over the 12 month term. On top of this you’d also pay an arrangement fee, usually 2%, so in this case £60,000. You can also expect to pay:

  • A valuation fee for the property or properties you’re using to secure the loan
  • Legal fees
  • Exit fees

In this example the total cost of the £3,000,000 loan would be over £300,000 – over 10% of the amount being borrowed.

You may also find that the higher the loan amount you’re looking for, the bigger the percentage deposit required by lenders will be, so that’s something else to factor in. Also keep in mind that because a bridging loan is secured against one or multiple other properties, these are at risk if you’re unable to repay the loan.

Although fees and costs can be high, keep in mind that a specialist bridging finance broker could help you save money on your loan and avoid unnecessary charges.

Get matched with a specialist large bridging loan broker

When you’re dealing with such huge sums of money, you really do need the support of a broker who’s an expert in large bridging loans. A broker with in-depth knowledge of this market will have existing contacts with the specialist lenders and be able to take you straight to the best matches for you, saving you considerable time and money. In the case study above for example, even just finding a rate of 0.65% rather than 0.67% would save you over £7,000.

Call 0808 189 0463 or make an enquiry and we’ll quickly assess your needs, match you with a specialist large bridging loan broker and set up a free, no-obligation chat.

FAQs

What’s the maximum bridging loan I can get?

There really is no upper limit for large bridging loans. it’s very much down to the discretion of the lender and the strength of your exit plan. Large bridging loans of tens of millions (or even higher) could be available in the right circumstances.

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Pete Mugleston

Pete Mugleston

Mortgage Expert

About the author

Pete, an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete found great success in going the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained, coupled with his love of helping people reach their goals, led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.

Pete’s presence in the industry as the ‘go-to’ for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for OMA of course!

FCA Disclaimer

*Based on our research, the content contained in this article is accurate as of the most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms that are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs.

Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

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