What is a 100% Bridging Loan?
If you want a bridging loan that covers the total amount of the value of a property then a 100% bridging loan or a 100% LTV (loan to value) bridging loan is what you need.
With a 100% bridging loan you won’t be required to put down a deposit. It will also allow you to borrow the full value of the property you are looking to purchase. However, in order to do this, you will be required to put forward other assets as security which is not always possible.
It is generally referred to within the industry as 100% funding because this type of bridging loan is not available to you unless you have other assets which effectively act as a deposit.
There are two main reasons why borrowers often find it difficult to satisfy a lenders criteria for a 100% bridging loan which are:
- Without any financial contribution from the borrower, lenders exhibit greater caution before offering a bridge loan covering the entire property value. Consequently, only a select few lenders provide 100% Loan-to-Value (LTV) bridge loans.
- Meeting the requirements for a 100% bridging loan is frequently challenging for borrowers, as lenders usually demand additional collateral in addition to the primary property.
Having said that despite the strict rules around 100% bridging loans it is not impossible to qualify for one. In the right circumstances, and if you can find the correct lender who is prepared to facilitate the loan it is possible to get 100% funding.
But, how do you know who the right lenders are? Here at Pyxis as a broker we have access to a large panel of lenders giving you a better chance of success. To get more information or to discuss your personal circumstances contact the team here at Pyxis today.
Bridging Loan Calculator
Try our bridging loan calculator here. Simply fill out the information and click “Continue”.
There are only three steps involved in the process and it should only take around five minutes to complete!
We’ll do the rest and contact you back with a bridging loan quote as soon as possible.
Can I Get A 100% Bridging Loan?
The easy answer is “yes, 100% bridging loans are available” however, you need to be aware that:
- Additional Assets will be required which is normally property to use as security.
- The services of a broker is usually needed to help you with finding a suitable lender. This is because the number of lenders offering 100% bridging loans is relatively small.
- As a result of the added risks for lenders, a 100% bridging loan will often be more expensive than more traditional finance options.
The problem is there are no fixed rules around 100% bridging loans as each case will be decided on its own merits. The lender will take into account the exact circumstances of your particular case, for example:
- The Type of Property are you Purchasing
- Its Location
- The risks associated with your exit strategy
- What assets can you provide as security
- Would they be easy to sell
- How much do you want to borrow
To get some idea of whether you could be eligible for 100% funding contact our team without delay. We will have a look at your particular circumstances and provide you with advice on the best options open to you.
What are the risks of a 100% bridge loan?
Bridge loans serve as a useful financing tool, yet without proper planning, they can often become a financial burden. Opting for a 100% bridge loan increases both risks and costs, making it imperative that you give it serious consideration before reaching a decision.
Remember holding onto your collateral is contingent upon your ability to repay the bridge loan. Failing to meet repayment obligations may result in fees and penalties, which is likely to have a negative impact on your credit history.
In navigating financial decisions like these, the expertise of a bridge loan specialist proves invaluable. They can assist you through the process, offering guidance on whether pursuing a 100% bridge loan aligns with your financial circumstances and objectives.
How To Get A 100% Bridge Loan
Securing a 100% bridge loan can be a much more complex affair than obtaining a loan with a lower Loan-to-Value (LTV), primarily due to additional procedural steps and eligibility criteria.
Given that some lenders are hesitant when it comes to offering high LTV loans, finding one willing to provide the full value of your collateral becomes crucial. It is not always advisable to approach lenders directly, as many prefer to engage through brokerages, especially when dealing with specialist lenders offering 100% LTV.
Here at Pyxis we have good working relationships with an expanding network of lenders that we regularly work with, and some may be open to offering borrowers 100% LTV loans. To find out how we can help you get the 100% bridging finance you are looking for, call and speak to our expert team today.
What do I need to qualify for a 100% bridge loan?
To meet eligibility criteria, it is imperative that your documentation is organised properly. A lender will scrutinise this paperwork to assess your suitability as a borrower for a high Loan-to-Value (LTV) loan. The documentation asked for could well include:
- Financial statements
- Credit reports
- Tax returns
- Information detailing income
- Documentation substantiating the asset(s) proposed as collateral
In the case of 100% LTV bridge loans, there might be a necessity to furnish additional information at various stages of the process due to the fact that lenders will normally exercise greater caution with this kind of loan.
If you are in need of a 100% bridging loan the team here at Pyxis can guide you through the application process, ensuring you have a full understanding of all the details. Upon approval, you will sign the loan agreement and receive the entire loan amount.
How much will a 100% bridge loan cost?
In contrast to loans with lower Loan-to-Value (LTV) ratios, there is no requirement for a deposit or equity when acquiring a property with a 100% LTV loan. This is because you will be borrowing the full amount needed to complete your purchase.
Opting for 100% of the property’s value amplifies the costs imposed by lenders to mitigate risk. This means they will normally exceed those of a conventional bridge loan.
These heightened costs manifest themselves in the form of increased rates of interest, or supplementary fees, such as arrangement fees, valuation fees, and underwriting fees, which are calculated as a percentage of the total loan amount. Given the larger loan amount, these fees are likely to be more substantial.
Since bridge loans typically span a brief period, around 12 months, the interest rates are already higher compared to traditional borrowing like mortgages. Additionally, these rates are expressed on a monthly basis, not annually.
With a 100% LTV loan, lenders might establish a higher interest rate as an extra layer of security and risk mitigation. Consequently, the repayment of the loan will entail higher interest payments.
Some lenders may offer the option to defer interest payments until the end of the term. This flexibility in bridge loan interest payments allows you to safeguard your cash flow for various needs such as development projects, moving costs, or other expenses that may arise during the loan period.
Our range of bridging loan solutions includes…
Why Choose Pyxis Capital for a 100% LTV Bridging Loan?
The team here at Pyxis have a wealth of knowledge when it comes to helping our clients find the bridging loan they need. The fact that as a reputable broker we have access to an extensive panel of lenders means that we can usually find the best available solution for our clients.
So, no matter whether you are looking for a 100% bridging loan to purchase a new property or as a way of completing a redevelopment project we can help. If you want more information on our extensive range of financial services, contact us today.
