What documents will I need to provide when applying for a regulated bridging loan? Is proof of income required?

In most cases income proof would be required. The bridging company wants to also make sure that you can get off the bridge, so they’ll require you to provide evidence of how you will repay it.

This could be in the form of a mortgage offer from another lender. It could be that you’ll be able to pay the bridge off with a lottery win, but I’m not sure how successful that would be.

But if you will refinance with another lender, they would want to see evidence of that. Generally they want to see that you’ve got the income to afford it. It’s like a mortgage – because it’s regulated and you’re living in the property, they want to make sure that you can get off that bridge.

It’s also underwritten in a very similar way to a mortgage. You will need proof of your ID, address and income. Lenders will assess your ability to repay the loan as part of the application, so income evidence is generally a requirement.

Can I get a regulated bridging loan if I’m self-employed?

Yes – and you would have to prove your income. Whether you’re employed or self employed, it takes on a similar format. That could be pay slips, bank statements, tax overviews or tax returns. If you have rent from other properties, lenders will take all of that into account.

Many bridging companies will accept self-employed applicants, and even those with a short trading history. Again, it all comes back to your income being sufficient to cover the finance and having a clearly defined exit strategy.

Can I get a regulated bridging loan with bad credit?

Anything’s possible, as a number of lenders have suitable products for people who have had credit glitches. The rates will obviously be higher and they may even restrict the Loan to Value.

Bad credit isn’t necessarily the be-all and end-all, but it would depend on the credit issue, how long ago it was and if there are any mitigating circumstances. In a nutshell, the answer’s yes, but the options are limited and the rate is likely to be higher.

Do I have to pay the bridging interest each month?

Lenders will charge interest on a monthly basis, and there are two ways in which the bridge could be set up. The client could service the interest each month, so that they would only owe the borrowing figure when they come to repay the loan.

However, most people don’t want to take on that additional outgoing, especially if they’re doing a renovation on their house. Instead they roll up the interest. You obviously borrow the capital amount and the interest is then added on to that. You don’t pay anything during that bridge period, which could be six or 12 months, and repay everything in one go at the end.

If you’re ready to repay the bridge early, your final loan balance would be smaller as you won’t have accrued as much interest.

What happens if the regulated loan is repaid early?

In most cases, you can pay it back early. We would always look at the client’s needs and aspirations, and whether there is anything on the horizon that would give them the opportunity to pay it back early.

Generally, we would go for a sensible length term on the bridge, such as 12 months, so you’re not putting yourself under stress. If then, for example, the property sells, or you win the lottery and want to pay it back, in most cases, you can do so.

If someone is likely to pay it back early, we would look for a deal with no early exit fees. A lot of bridging companies don’t charge these fees, but some do. It’s a trade-off between no exit fee and the rate that the lender would offer. We might possibly go for a lower rate of interest if there was only a one or a two month exit fee.

Some bridging companies might require the borrower to hold the bridge for a minimum of three months – because obviously they want to make their money. We would always check any time constraints with you.

Can I waive my rights and take an unregulated loan?

Generally not, no.

How long does a regulated bridging loan take to arrange? How long will my regulated bridging application take to complete?

Like a mortgage, you need to apply and the bridge is assessed. If the lender is happy, they would issue some initial terms. That’s an illustration of the rate, the fees and what the total amount payable will be. If the client is happy with that, we convert that to an application and then a valuation is done.

The process can take anything from two to four weeks. I spoke to a firm of solicitors the other day and four weeks for them was optimistic. If the legal team is busy, that’s the main factor – they’re the ones that control the timeframe.

We allow for around four weeks on average, but it can vary if there is anything complex. If it was a fairly straightforward bridge it’s right to allow four to six weeks. If it’s more complicated, it could be longer.

What else do we need to know about regulated bridging loans?

In some situations you may be able to reach almost 100% bridging. You might have multiple properties, where you could take a bridge on the property you currently live in and then, if the property you’re buying was suitable security, you could borrow against that too. That’s something we could help you manage.

We’ll speak to the bridging company, the valuer and the solicitor on your behalf. A gentleman I know purchased a property and was then splitting the title on it – to separate the house that they lived in and an annexe. That added some complexity – and we can help advise and manage all of that.

We’ve also got strong relationships with a lot of the bridging providers. We can have some good, in-depth conversations with them and make sure that they are comfortable with the proposition. We can help them understand what the client’s looking to do.

It’s not as simple as just asking for a bridging loan – we need to paint a picture. We show the bridging company what the client’s looking to do, their income, their exit strategy and details of all the properties involved.

Quite often we can get better deals. As an example, perhaps you’ve got a property worth £100,000 and you took a bridge on that at 70% Loan to Value. You’ve then got a property to buy, which is worth £200,000 – so you’re borrowing £70,000 against two properties. That means it’s a lower Loan to Value which will get you a better rate of interest.

We’ll always look for angles and ways to get a better rate if we can and, as a strategic partner with some bridging companies, we can access better rates than you would get direct.

THE FINANCIAL CONDUCT AUTHORITY DOES NOT REGULATE SOME FORMS OF BUY TO LETS AND BRIDGING FINANCE. THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME/PROPERTY.

YOUR HOME/PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR OTHER DEBT SECURED ON IT.

THERE MAY BE A FEE FOR MORTGAGE ADVICE. THE PRECISE AMOUNT WILL BE £495 PAYABLE AT APPLICATION STAGE FOR BRIDGING FINANCE AND WILL BE AGREED WITH YOU BEFORE PROCEEDING.

MORTGAGE STYLE LIMITED, TRADING AS MORTGAGE STYLE, IS AN APPOINTED REPRESENTATIVE OF H L PARTNERSHIP LIMITED, WHICH IS AUTHORISED AND REGULATED BY THE FINANCIAL CONDUCT AUTHORITY.

MORTGAGE STYLE LIMITED IS REGISTERED IN ENGLAND AND WALES. REGISTERED NO: 05743648. REGISTERED OFFICE: MORTGAGE STYLE LTD, ELM TREE FARM ESTATE, THE SHEEPWAY PORTBURY, BRISTOL, BS20 7TF