How long does it take to set up a bridging loan?
A bridging loan timescale for an application process can be as short as 48 hours from start to finish. Although one to two weeks is more common. It will depend on the complexity of the application and the nature of the assets being offered as security. If there are multiple assets, each will need to be valued before a decision is made, which can take a little longer. Novellus do not have any third party restrictions or credit committees to consult, therefore the approval times are market leading in terms of speed. Each case is different but at the beginning of the application, borrowers will be advised of all of the requirements before a loan can draw down (valuation, searches or no search insurance, property information forms etc).
How much can I borrow with a bridging loan?
Novellus specialise in lending between £1,000,000 and £5,000,000. Novellus has completed on loans as small as £100,000 and as large as £27,000,000. As we use our own capital, each case can be individually assessed.
What can I use a bridging loan for?
A bridging loan can be used for any legal use, but they are mainly used for such things as purchasing commercial property, mixed-use developments, land, with or without planning, property investments, buy-to-let ventures or the refinancing of existing loans.
What is a closed bridging loan?
If the exact exit date is set prior to the loan being awarded, this is known as a closed bridging loan. If you know exactly when you are going to receive long-term funding through a property sale or mortgage approval, this is used as the exit date. These types of loans are considered less risky to the lender and will generally have more competitive rates.
What is an open bridging loan?
An open bridging loan refers to a loan given when there is no exact date for repayment set. However, the loan period will be set prior to approval, which can usually be up to 12 months, during which time the loan must be repaid. If the borrower does not know the date they will secure further finance there is obviously more of a risk to both them and the lender.
Is bridging finance available if I do not have any income?
Proof of income is usually required, but as long as there is a predetermined exit strategy in place and assets to act as security, bridging loans can be considered even if you have no income. The arrangement fee typically is deducted in advance so the loan removes the risk of serviceability. Novellus will consider each case individually and as long as we are satisfied that there is a strong repayment plan, we will consider applications even if you have a limited income.
Can I get a bridging loan to buy a house?
A bridging loan is an ideal short-term mortgage solution if you want to buy a house quickly. If the chain breaks in the middle of the purchase a bridging loan will ensure that the sale can still proceed. It is also useful if you are thinking of downsizing, upsizing, buying a retirement home or any circumstance where you want to buy your new property prior to selling the old one.
Are bridging loans available for home extensions?
Bridging loans for extensions to houses can be arranged, particularly if you are looking to improve, restore or develop a property in order to sell it on or rent it out.
Can I get a bridging loan to buy a property at auction?
Yes, you can get a bridging loan to buy a property at auction. It is a common method for financing auction property purchases in the first instance, as loans are approved quickly, meaning a buyer will have access to cash fast. Auction properties often need to complete within a month and traditional mortgages will often take much longer than this to arrange, which may limit a buyer’s options. A bridging loan fills the gap, giving time to secure long term finance. This is one of the most efficient uses of a “Bridging Loan”.
What is the maximum term for a bridging loan?
Novellus offer varied term lengths; a bridging loan example term is generally 6-12 months but as every application is considered on a case-by-case basis, these timeframes can vary.
What type of security can I use when applying for bridging finance?
Typically loans with Novellus are secured by a first legal charge against property or land in the UK and Ireland, but in certain circumstances, we can consider other high-value assets. We have lent against international property assets and against businesses so whilst the majority of our loans are real-estate backed, please do still call with any funding requirements as these will be assessed on their merits.
Can you arrange bridging loans for limited companies and partnerships?
Novellus offer commercial bridging loans to limited companies and partnerships. At Novellus we consider every application on a case-by-case basis as we do not follow any set criteria and we are not tied to fixed products. If the person applying on behalf of the company has experience within the property industry, this will stand the application in good stead. A large deposit will also assist with the application and in turn help in acquiring the better rates. We understand the structure and our lawyers have lots of experience with trusts and complex ownership structures. We will not shy away from company-owned assets and whilst the time frames may vary, we have completed many loans to international companies owning UK property.
How long will it take to get my funds?
One of the biggest factors when deciding on a bridging loan over traditional funding options is how fast bridging loans are from application to approval to final funding. Novellus has in the past been able to provide funds within 48hours of the initial application.
Do bridging loans have early repayment fees?
If you are in a position to pay the bridging loan off early, at Novellus you can do so without incurring any early repayment fees. You will also not be charged for the interest for the additional months save for the notification period of repayment. This is the difference when comparing bridging loans to a traditional mortgage where a charge is added for paying off the loan early.
Can I get a bridging loan with bad credit?
It is possible to obtain a bridging loan with bad credit. You will have to undergo a credit check prior to a final decision being made, but not as much weight is given to the credit score system as is allotted by traditional finance lenders. The exit strategy is an important consideration; if your credit issues are likely to affect your chances of obtaining long term finance, your application is less likely to be approved. However, if the intention is to sell the property to finance the bridging loan, your application will be considered more favourably.
Up front communication in relation to historic credit issues helps greatly in the underwriting. We have lent to borrowers who had previously been bankrupt and understand that not all individual cases are the same. CCJs and historic financial issues will not mean an immediate rejection. We will try to understand why and believe that the past does not have to dictate the future. However, the more information we have up front will enable us to clearly communicate how we consider the risk and ensure that any issues can be swiftly dealt with before abortive costs might be incurred.
Do I need to pay any fees upfront?
You will be responsible for valuation and legal fees before the loan is drawn. However, there are no upfront fees charged from Novellus as the arrangement fee and interest are deducted from the loan at the outset.
Can I use my mortgaged home as security for a bridging loan?
It is possible to use a mortgaged home as security for a bridging loan, as long as there is enough equity left on the property to cover the loan amount. The first lender normally has to give their approval before the second charge loan is accepted as well. Although please note, in some circumstances (depending on the purpose of the loan), this may mean the loan will become regulated. Novellus cannot offer regulated loans but we will quickly advise if we believe your application will fall into that bracket once we have a better understanding of the circumstances.
Is my personal information kept private?
Of course! All applications are confidential and your details will never be shared with anyone else (aside from the solicitors) without your express permission.
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