Bridging Finance | Lampi Capital

SHORT TERM BRIDGING LOANS

As a specialized broker, we offer assistance in obtaining bridging loan finance for both residential and commercial property transactions in the UK.

Our bridging loan broker service is here to assist you in securing land or property in a cost-effective manner. Here's what we offer:

Market-leading bridging loans ranging from £25,000 to £25 million.
Competitive rates starting from 0.65% per month.
Lower rates available for loans of £1 million and above.
Swift financing - depending on your circumstances, we can offer funds within 7 working days if needed.
Flexible terms ranging from 3 months to 3 years.
High Loan-to-Value ratios (LTVs) up to 80%, and potentially more with additional assets as collateral.
Interest roll-up options.
Consideration for various property types, including residential (on a regulated bridging basis), buy-to-let, HMO, investment, and commercial properties.
Financing for light refurbishments (properties currently uninhabitable, under permitted development rules, or requiring internal refurbishment) and heavy refurbishments (extensions, basement digs, loft conversions, commercial to residential conversions, barn conversions).
Property development finance for new builds and conversions.
Bridging finance for business purposes, such as paying HMRC tax bills, purchasing land or new premises, providing a deposit for new purchases, and supporting business growth.
Consideration of alternative assets like pension funds, investment portfolios, fine art, and classic cars.
Automated valuation option available for properties under £1 million.
We offer a friendly and professional service, dedicated to helping you access the funding you need at the most favourable rates.

What are Bridging Loans?

Bridging loans are specialized short-term loans designed to provide a temporary cash flow solution or act as a "bridge" until additional permanent finance becomes available.

Obtaining a bridging loan is straightforward and flexible, with criteria that are more accommodating than those of most high street banks and mortgage lenders. Similar to a mortgage, a bridging loan is secured against your property, and the lender typically requires a realistic and viable exit strategy.

What can Bridging Loans be used for?

Bridging loans can be utilized for various purposes, including:

Bridging the gap between purchase and sale: You can secure a property quickly, even before selling your current home, avoiding the risk of losing out to another buyer.
Downsizing: When the timings between buying and selling existing property do not align, a bridging loan can facilitate a smoother transition.
Mortgage chain issues: If the home buying chain breaks down, a bridging loan can ensure you have sufficient funds to purchase the new house, even if the sale of your old house falls through.
Buying an auction property: Auction bridging loans allow you to pay the required percentage needed to secure the property on the day of the auction.
Need to move fast: During the property purchasing process, a bridging loan can provide a quick and temporary cash injection when you most need it, potentially making a difference in any property transaction.
Development finance: For property redevelopment projects, a development bridging loan can help kickstart the project by providing the necessary funds.
Lease extension: Bridging loans can cover the costs of extending a property lease, which may be necessary before a mainstream lender considers granting you a mortgage.
Commercial property: Bridging loans are available for commercial property purchases, refinancing, and making property improvements.

Auction Finance

Involving Lampi Capital's bridging finance specialists well in advance of the auction will ensure that this type of property purchase is seamless and straightforward. With their expertise, you'll have a clear understanding of your borrowing capacity and affordability, enabling you to make informed bidding decisions with confidence.

Short Term Loans

Bridging finance serves as an excellent solution for acquiring very short-term funding. While arranging short-term bridging loans can be intricate, they become a viable option when you require substantial capital, even for brief periods. Discover more about our short-term loan offerings here.

Residential Bridging Loans

Bridging loans offer a wide range of applications concerning the sale and purchase of residential properties. With exceptional flexibility, residential bridging loans allow for various uses, as long as a few essential requirements are met.

Large Bridging Loans

Just because you need a large loan, that doesn't mean you'll have to endure a lengthier transaction: Lampi Capital will be able to secure offers for large bridging loans as quickly as possible and always within the timeframe you need.

International Bridging Loans

From negotiating a deal for you to assisting in planning for aspects like foreign exchange risk and where to seek legal advice, the international bridging finance specialists at Lampi Capital will be with you at every step of the way to ensure your transaction is swift, easy, and hassle-free.

Is Bridging Finance For You?

A bridge loan is a widely used and cost-effective financing method. Bridging finance can be arranged swiftly and is always customized based on individual negotiations. As a result, Lampi Capital can connect you with bridging loan providers to tailor a loan that suits your specific situation.

Often promoted as the ultimate problem solver and opportunity creator, bridging finance is frequently employed when time is of the essence or when temporary capital is needed. It can also be a suitable solution when traditional lenders are unable or unwilling to lend for various reasons.

Some borrowers may be hesitant about bridging finance due to perceptions of it being a risky product. However, the key is to use bridging as a finance vehicle only when there is a specific reason and when it makes financial sense to do so. There are numerous scenarios where it can be a perfect-fit solution, especially for high-net-worth individuals with significant net worth.

Bridging finance can sometimes be viewed negatively as it is generally more expensive than products like mortgages, and there is a risk involved in needing to repay the loan by a certain date. However, bridging finance is not inherently riskier than any other type of finance; it simply needs to be utilized in the right circumstances. Having a good exit strategy and a clear plan for managing the loan are crucial elements of bridging loan finance.

This type of financing offers a convenient and practical way to access funds quickly. In many cases, it enables you to make purchases or pursue plans that might otherwise be unattainable. The comparative cost of bridging loan finance is often justified by the opportunities it opens up, such as making critical purchases, breaking a property chain, releasing equity, and more.

As with any loan, it's essential to seek specialist advice to ensure bridging finance is the best option for you. Finding a deal tailored to your circumstances is particularly crucial when considering large bridging loans of £1 million or more. By having a solid plan in place for using and repaying the loan, much of the potential risk associated with bridging finance can be mitigated.

Lampi Capital will thoroughly explore all your options and will only recommend bridging finance if it is a viable and practical solution for you. Their bridging finance specialists will ensure you fully understand how this type of finance works, including any risks and benefits, empowering you to make an informed decision.

Disadvantages of Bridging Loan Finance

Price:

Compared to more conventional loans such as mortgages, bridging loans can be relatively more expensive. When opting for bridging loan finance, you are borrowing a significant sum of money for a short period and a specific purpose, such as solving a problem, achieving liquidity quickly, or pursuing an opportunity. Bridging loans are commonly utilized when other types of finance are not feasible, which results in a premium cost for this service. The lender assumes a bit more risk in these cases, and there are numerous aspects to organize within a tight timeframe, leading to higher costs compared to other loan types.

However, it is crucial to consider the context of what you aim to achieve when evaluating the term "expensive." Bridging loans may cost more than conventional loans, but they can sometimes be the only viable option for your needs. Whether you want to break a property chain, create liquidity, purchase a new property, or address a financial challenge, bridging finance offers remarkable flexibility and may be the sole pathway to the required funds. In many instances, paying the premium for this type of finance is entirely justified.

Fees:

Bridging finance typically involves more fees compared to conventional loans, including legal fees, lender fees, valuations, arrangement fees, and other associated costs. Lampi Capital will provide you with comprehensive information about all applicable fees when considering a bridging loan, enabling you to have a clear understanding of the total costs in addition to the interest rates.

Risk:

Lenders assess borrowers based on their repayment plans and incoming revenue, such as salaries or other sources of income. This evaluation contributes to their confidence in lending to you. For example, if you are in the process of selling a property or expect a significant settlement or inheritance that would positively impact your net worth, it can positively influence your lender's confidence. The timing and certainty of the liquidity event play a crucial role for lenders; they want to be certain that you will receive the funds by a specific date. The more assured both you and your lender are about your ability to repay the loan, the smoother it will be to secure the financing.

As with any loan, bridging finance comes with its inherent risks. Non-repayment of the loan could result in the loss of your property. It is essential to have a well-thought-out and secure repayment plan in place, along with the ability to demonstrate your capacity to pay back the loan on time. Lampi Capital will guide you through the process, ensuring you understand the risks and help you create a solid repayment strategy, ultimately safeguarding your interests.

Advatgages of Bridge Loan Finance

Speed:

Obtaining a mortgage or other types of lending can be a time-consuming process, often taking several weeks to even months to complete. The rigorous review of your application, approval process, onboarding, and compliance checks can typically take at least 6-8 weeks, or even longer for complex circumstances.

In contrast, bridging lenders also meet regulatory requirements but operate more swiftly, making the process of getting a bridging loan much faster than securing a mortgage. This speed is especially beneficial if you require financing urgently.

Privacy:

Not all bridging finance is regulated, allowing for smaller, agile lenders to operate in this space. This results in quicker loan approvals and a higher degree of privacy, as lenders focus more on the specific deal, exit strategy, and security rather than exhaustive details of your financial background.

Flexibility:

Bridging finance lenders are generally more nimble and flexible compared to larger mainstream lenders. Their decisiveness allows for quicker decision-making processes, and your broker, such as Lampi Capital, often maintains personal relationships with these bridging loan providers. This personalized approach enables your broker to build a loan tailored to your financial background and scenario, making the process more flexible and efficient.

Rates:

Bridging lenders are non-bank lenders and have the freedom to set their own rates and fees. Unlike banks, which directly pass on interest rate increases to borrowers with flexible rates, bridging lenders fix rates upfront. This means that potential base rate increases during the loan term will not impact what you are required to pay.

Large Loans: Bridging loans can accommodate substantial sums, with most lenders offering loans of around £2-5 million (usually at an LTV of about 70-75%, provided your finances are sound and you possess significant net worth). Specialist lenders operating at the higher end of the market can provide even larger bridging loans, with amounts exceeding £10 million becoming increasingly common. Such lenders are well-equipped to handle large loan transactions against high-value properties.

Ease:

Borrowers often turn to bridging finance when they seek a quick and hassle-free loan process. While all loans require organization and time investment, bridging finance typically involves faster and less complicated arrangements compared to products like mortgages. Bridging lenders prioritize the exit strategy and asset, making it less burdensome to arrange and requiring less paperwork and information. Many high-net-worth individuals are willing to pay a premium for pragmatic lending that can be swiftly closed.

How Much Can I Borrow Using a Bridging Loan

With bridging finance becoming more prevalent, numerous lenders have entered the high-value and large loan market. Currently, the market offers lenders that provide substantial loan amounts.

The amount you can borrow will primarily hinge on the property you use as collateral and your repayment plans. Generally, lenders offer a maximum of around 70-75% LTV, with some players capable of offering slightly more. However, depending on factors such as your background, the property, and the intricacy of the deal, some lenders may offer considerably less. To secure the best LTV, having well-defined plans for utilizing and repaying the loan, along with a strong financial background, is crucial. A robust overall financial position enhances your borrowing capacity.

Certain lenders may offer multi-asset lending, enabling you to secure a loan against multiple properties in your portfolio. This approach can optimize the amount you are eligible to borrow. As a borrower, working with Lampi Capital will allow you to explore the lenders offering the most suitable terms and options for your unique circumstances.

Using Bridging Loans

Over time, both lenders and borrowers have recognized the tremendous flexibility bridging finance offers. While it still serves its primary purpose of funding a new home purchase before a property sale, bridging finance is now widely used in various scenarios, with equity release being one of the most common.

In equity release, a lender secures a short-term loan against the equity in your property. This type of finance can be utilized in diverse situations. For instance, you might opt for equity release to invest in shares, purchase or expand a company, acquire a new property, or consolidate debt. The versatility of equity release makes it a valuable option for borrowers requiring quick access to capital in various circumstances. Lampi Capital can guide you through the equity release process, offering tailored solutions to meet your specific needs and financial goals.

How to Secure a Bridging Loan

Broadly speaking, there are two approaches to securing a bridging loan:

Directly approaching lenders by yourself, similar to how you would approach lenders for a mortgage. This option can work well if your situation is straightforward, and you do not need to borrow a significant amount. It can be beneficial if you fit into a standard category and can take advantage of off-the-shelf bridging finance packages.
Going through a trusted broker like Lampi Capital. This option is more suitable if you require a substantial amount of money, have a non-standard scenario (such as using unique structures, being a non-UK resident, or dealing with international properties), or if your property is held in an unconventional manner. Working with a broker is particularly advantageous if you need a high-value bridging loan or wish to secure finance for an international property. These types of situations are often considered non-standard by most lenders, and they may not be able to offer suitable finance. Lampi Capital specializes in high-value, international, and unconventional deals and knows which lenders can provide the most competitive packages.

Many large lenders offer pre-packaged, one-size-fits-all products that may not be suitable for your specific needs. In such cases, using a broker is also the best option if you require a more tailored loan. For instance, you may need a bespoke loan if you plan to repay the loan through unconventional means, such as a divorce settlement or the sale of a business. Lampi Capital can offer personalized solutions to meet your unique requirements, ensuring you get the best-suited bridging finance package for your situation.

Bridging Loan Interest Rates

Bridging Loan Interest Rates Bridging loans are typically structured with the interest rate represented as a percentage of the loan amount, calculated on a monthly basis. For instance, it could be 0.45%, 1%, or 2% per month.

There are three methods of paying the interest rate:

Retained Interest: Your interest payments are deducted from the gross loan amount, and they cover the interest costs as they accrue. In other words, you pre-pay the interest on the loan.
Rolled Up Interest: Instead of making monthly interest payments, the interest is added to the outstanding capital on a monthly basis. You will then repay the accumulated interest along with the loan amount when the loan matures.
Serviced Interest: With this option, you will be required to meet the monthly interest cost, similar to a traditional mortgage.

How you choose to pay the interest will impact the total cost of your loan, your cash flow, and the amount you can borrow. Depending on your specific situation, Lampi Capital will guide you through the most suitable interest structure that works best for you. We will seek out your preferred option from lenders to ensure you are in the most advantageous position for your bridging finance needs.

Repaying a Bridging Loan

Bridging loans are short-term financial products, which means the repayment process differs from that of long-term loans like mortgages that are repaid over several years.

The duration of bridging loans can range from a few days to several months, up to a maximum of approximately 36 months. Due to their short-term nature, lenders will need a clear understanding of your repayment plan. Unlike long-term loans where you gradually repay the capital over time, bridging loans require the repayment of the entire capital as a lump sum. Therefore, it is crucial to present a viable exit plan to instill confidence in lenders.

There are various options for repaying a bridging loan, also known as the "exit" strategy, including:

Refinancing: This is a common method where you obtain another loan from a new lender to repay the bridging loan. The new loan is typically a longer-term lending product like a mortgage, which usually comes with lower interest rates than bridging finance.
Property Sale: Repaying the bridging loan by selling the property against which the loan is secured. Open bridging loans allow flexibility in the repayment timeline, as the property may sell within 3 to 6 months or more.
Sale of Assets / Liquidity Events: Using funds from other sources, such as the sale of another property in your portfolio, assets, shares, or a business payout, to repay the bridging loan in a lump sum.

Lampi Capital collaborates with lenders across the market and takes the time to understand your unique situation, plans, and financial standing. Our bridging finance broker will provide a detailed explanation of your repayment options and assist in crafting the best-suited plan for you. As bridging loans are designed for short-term financing, if you require a longer-term loan, we can also help arrange and negotiate your refinance while arranging your bridging finance.

Why Lampi Capital For Bridging Loans?

Navigating the bridging loan marketplace on your own can be quite challenging, especially if you're new to this type of finance. With hundreds of lenders to choose from, approaching them directly may result in generic bridging finance offers that only partially cater to your needs, and you might end up paying higher interest rates.

Handling all the parties involved in the transaction can be extremely demanding if you go it alone. However, with Lampi Capital by your side, we will actively engage in the transaction, ensuring all parties stay on schedule and keeping your goals on track without any disruptions. This way, you'll save valuable time and won't have to deal with the often tedious but essential aspects of the deal – Lampi Capital will keep you informed at every step and handle the workload for you.

As your trusted broker, Lampi Capital will directly approach lenders to secure the best rates and terms that align with all your requirements. From your initial conversation with us to the loan drawdown, our bridging finance broker will be by your side, answering your questions, ensuring your plan stays on course, and tirelessly working to achieve the results you need.

Bridging Finance for Auction Purchases

Auctions present excellent opportunities to secure property bargains or acquire undervalued properties. The bidding process can be swift, but it's essential not to be swayed by the speed – to put yourself in the best position, preparing for auction finance well in advance is crucial.

When planning to purchase a property at an auction, auction finance provides an ideal alternative to buying in cash. This type of finance allows you to access capital quickly, making it ideal for swiftly acquiring investment properties. Moreover, auction finance comes to the rescue when you come across a property you love at the auction, even if your funds are currently tied up in other real estate and assets.

Typically, at auctions, you need to have cash readily available for the deposit on the auction day and funds to purchase the property within the following three weeks.

Involving Lampi Capital well before the auction ensures a smooth and straightforward property purchase process. Your bridging finance broker will work on securing an in-principle bridging finance agreement ahead of the auction. With this valuable information, you'll be well-equipped to make the right bid, based on your borrowing capacity and affordability.

Whether you are an experienced or first-time developer, auction finance is usually accessible. Lampi Capital will skilfully negotiate an attractive package tailored to your unique needs. For first-time developers, lenders may require additional collateral, so it's essential to consider this aspect if you haven't bought at an auction or developed a property previously.

Auctions can be exhilarating, especially for first-time bidders, and it's easy to get carried away with ambitious plans. As your dedicated partner, Lampi Capital will also serve as a sounding board, attentively listening to your ambitions, goals, and vision for your future property. Your broker will provide insights into the auction finance options available, ensuring that the amount you can borrow aligns perfectly with your property plans. This way, you can decide whether to adjust your plans accordingly or explore additional financial flexibility.

Bridging Finance For Property Development

Lampi Capital specializes in providing bridging finance, an excellent option when you require capital for property development or redevelopment projects. Whether you need funds to construct or renovate a commercial property, your own residence, or an investment property, a bridging loan can be the perfect solution. It allows you to access the necessary credit quickly and efficiently.

Additionally, if you have taken loans from multiple lenders to finance ongoing property development, a bridging loan can simplify the process. By paying off multiple lenders and centralizing your borrowing, managing the financial aspects of your project becomes much more straightforward. This flexibility and versatility make bridging finance for property development a highly sought-after choice, with a wide range of scenarios where it can be effectively utilized. With Lampi Capital, you can expect tailored and reliable bridging finance solutions to meet your property development needs.

Regulated and Unregulated Briding Loans

Regulated bridging loans are loans secured against properties where you have resided previously, currently reside, or plan to live in the future. They also include properties where your family members reside or will reside in the future. These loans are subject to oversight by the Financial Conduct Authority (FCA), and as a result, affordability rules apply. The lender will assess your income streams to ensure that you can comfortably meet the monthly loan repayments.

On the other hand, unregulated bridging loans are secured against all other property types used for various purposes. This category includes buy-to-let properties, property developments, commercial properties, and others. Unlike regulated loans, unregulated bridging loans do not fall under the same FCA oversight regarding affordability assessments.

Lampi Capital only deals with unregulated finance and does not have FCA permissions.

Lampi Capital Ltd is unregulated and does not have FCA permissions. Some types of finance such as bridging, development, commercial and buy to let mortgages may not be regulated by the Financial Conduct Authority.
Fees may be payable for advice and/or arrangement of your loan.

As a mortgage is secured against your home or property, it could be repossessed if you do not keep up the repayments on it or any other loan secured against it. Think carefully before securing other debts against your home.

Please seek tax advice, prior to taking out any unsecured facilities. If required, we would be more than happy to make an introduction to one of our tax specialist partners.