What is a Residential Bridging Loan?
Residential bridging loans are designed to help borrowers who are looking to purchase an investment property.
This type of bridging loan is regulated by the Financial Conduct Authority (FCA). And is a short-term financial solution used when purchasing a residential property. When applying for this type of bridging loan you need to work with an FCA Authorised and Regulated Firm such as Pyxis Capital.
Residential bridging finance products provide you with the time needed to arrange longer-term finance. It may be that the buyer is waiting to release funds from the sale of another property, or that the house they are buying is not at present mortgageable. In such cases a mortgage bridging loan offers clients access to the funds they need to purchase the property until it becomes suitable for a traditional mortgage from a high street lender.
Who Can Apply for Residential Bridging Loans?
If you are the legal property owner or will be once the property transactions is complete you can apply for residential bridging finance.
The property needs to be in the UK and finance is accessible to both UK and Foreign Nationals. Borrowing is available to Individuals; Trading Ltd Companies; Special Purpose Vehicle (SPV); and Offshore Borrowing Vehicles.
With a residential or mortgage bridging loan, you can bridge a shortfall when a sale is delayed, obtain planning permission, or undertake light refurbishments. See how a bridging loan might look for you with our bridging loan calculator.
How a Short-Term Bridging Loan Can Help
Some of the main reasons a buyer may use a bridging loan when purchasing a property include:
Bridging loans are a short-term solution rather than a long-term financing option. This is due to the interest rates and associated costs being higher than a traditional mortgage. The loan term is typically 12 months, allowing borrowers the flexibility needed to transition from one property to another. When taking out a bridging loan it is important that you have a clear exit strategy to ensure you do not accumulate substantial interest or fees.
Bridging Loans for House Purchases
If you’ve found the perfect house but need to move quickly to secure it a bridging loan can be a useful tool. Many people use bridging loans for house purchases if for example, they are waiting for funds from the sale of another property, or if the house they are buying needs renovation before it can be mortgaged.
There are several reasons why mortgage bridging loans are used by people buying a house which include:
Regulated Bridging loans can be arranged quickly, usually within 30 days subject to satisfactory completion of valuations and legal work.
Because you are using the value of the house you are buying or selling as collateral for your loan lenders will often consider applicants with less than perfect credit ratings. However, this is subject to being able to refinance onto a traditional mortgage before the bridging finance term ends.
Residential Bridging Loans
Residential bridging loans are designed to help borrowers who are looking to purchase either a new home or an investment property. If purchasing an investment property, it might be better to consider a non-regulated bridging loan secured against the investment property. This is something that the team at Pyxis Capital would be happy to discuss.
This type of bridging loan provides you with the time needed to arrange longer-term finance; bridge a shortfall when a sale is delayed; obtain planning permission; undertake light refurbishments; and organise tenants.
Before taking out a residential bridging loan there are a number of things you should do, which include:
A financial advisor can help you to understand the risks and benefits of bridging loans and find the right lender for your particular needs.
There are a number of lenders that offer bridging loans, so it is important to compare quotes from different lenders before you apply.
It is important to have a clear plan for how you will repay your bridging loan within the agreed repayment term.
What Type Of Residential Property Is Acceptable?
Most types of property are acceptable for a residential bridging loan including…
- HMO (House in Multiple Occupation)
- Apartment/Flat
- Grade II Listed
- Barn Conversions
- Holiday Lets
- Non Standard Construction
Benefits of Bridging Finance
The main benefit of bridging finance is the speed at which funds can be made available to the borrower. A lending decision can be agreed within a couple of hours of us receiving the initial enquiry and funds made available within days. In a competitive and fast-moving property market this allows the borrower to act quickly and secure the investment property.
| Residential Bridging Finance Basic Criteria | |
|---|---|
| Loan To Value | Up to 90% |
| Loans Available | 1st & 2nd Charge |
| Loans Size | £50,000 to £25,000,000 |
| Terms | 1 Month to 36 Months |
| Adverse Credit | Acceptable |
| Rates | From 0.45% |
Why Use Pyxis Capital?
The Team at Pyxis Capital have extensive knowledge of bridging finance and take time to understand a client’s needs and requirements.
You will have a single point of contact from start to finish and will also be provided with direct contact details for one of our Company Directors.
Most importantly you won’t be left with the finding an Exit Strategy from your bridging finance facility. As this is something that will be researched on day one and if possible, agreed in principle with a long-term lender.
Our range of bridging loan solutions includes…
Residential Bridging Loans – FAQs
Residential bridge finance provides short-term property financing solutions for situations like property chains, second property purchases, and refurbishment projects. It differs from traditional mortgages due to its quick turnaround and flexibility.
Pyxis Capital is a nationwide broker specialising in bridging loans for property. We connect borrowers with lenders offering bridge loan options to meet various property investment funding needs.
Bridging loans are ideal for property chain support, enabling you to secure a property while waiting for the sale of your existing one. They’re also great for second property purchases, refurbishment project funding, and even auction property purchase financing.
Typically, quick turnaround mortgages like residential bridging loans can be approved and funded within 3 days to 3 weeks, making them an excellent choice for time-sensitive property transactions.
Homeowners’ bridging loans and commercial bridging loans diverge in purpose and property type. Homeowners’ loans aid residential property transitions, bridging gaps between property sale and purchase, while commercial loans serve business investments, linking initial funding to long-term financing. A Homeowner Bridging Loan is also a regulated by the Financial Conduct Authority (FCA), whereas Bridging Finance for commercial use is not regulated by the FCA.
Eligibility encompasses creditworthiness and equity for homeowners, while commercial loans evaluate business viability and property income potential.
Land is less liquid than commercial and residential property, which can lead to uncertain sale prices. The higher interest rates reflect the potentially higher risk associated with land transactions, especially those without planning permission.
If you’re purchasing an auction property and need quick funds, bridge finance can provide the necessary financing within the tight auction deadlines, offering a solution when traditional mortgages might not be feasible.
Residential bridging loans for landlords and buyers typically range from £30,000 to £3,000,000. This wiggle room allows you to secure funding based on your specific property investment needs.
Eligibility for a residential bridging loan is often based on factors such as the value of the property, exit strategy, and specific circumstances. Pyxis Capital can help you assess your eligibility based on these criteria.
We always aim for transparency in our bridging loan services. As part of our Initial Disclosure Process we ensure you have clear information about lender and brokerage fees and other relevant financial information upfront.