If you’ve gotten to our website, you’re probably in the market for bridging finance. This blog serves as a guide to explain what we provide as a bridging lender, and what we need from you to release funds as soon as possible.

Who is bridging finance for?

Bridging finance offers a quick method to borrow money that can be used in the short-term to purchase/renovate property. The main advantage of a bridging loan is speed: using bridging finance unlocks previously unattainable opportunities. Whilst most other “term lenders” can offer a lower interest rate, many opportunities may have already passed by the time you get an offer from them a few months later. The loans we provide are referred to as a “bridge” because our speed gives you the opportunity to bridge the gap between completing a deal and obtaining long term finance or selling.

Here at SDKA, we offer unregulated bridging loans, exclusively for individuals and companies buying property for investment purposes only. Residential properties cannot be occupied by the borrower. When applying for bridging loans it is very important to have an exit strategy. Here are some examples of proposals we receive and accompanying exit strategies:

• Buying a property at auction: Immediately after winning the bidding on a property, you are required to pay an initial deposit to the auction house. However, this is only a fraction of the total cost The remaining funds that make up the total cost of the property are typically due within 20-30 days. It is these remaining funds that a bridging lender covers when money is borrowed. When the property is refinanced, our bridging loan can be repaid.
• Buying a property before selling a current property: Bridging loans can help with this situation by lending money for the purchase of the new property against a current property already owned by the borrower. The loan can then be repaid using proceeds from the sale of the current property.
• Property renovations: By borrowing money to renovate a property, you can increase its value. This allows a term lender to refinance the property on the increased value when the works are finished. From the money received when the property is refinanced, the total loan amount you took with the bridging lender can be repaid.

This list only gives a few instances of people we may provide loans to. Over our many years as a bridging lender, we have seen our fair share of unique scenarios.

At SDKA, many of our clients are not UK residents. We accommodate many foreign nationals and expats in their property purchases through our bespoke offerings. So, if you are a foreign resident in the market for a bridging loan, be sure to get in touch!

What do you need to provide to be considered for bridging loans?

When you apply for a loan, it is very important for us to get some information from you to ensure a successful loan application. These checks ensure that our borrowers are able to afford and repay their loans.

Here are examples of a few details our underwriters look at before we grant loans:

• ID checks
• Credit check (includes credit score and history)
• Property titles
• Sources of income
• Bank account statements
• Utility bills
• Associated registered companies

It is important to note that this list is not exhaustive: depending on your circumstances, we may have other questions that need to be answered before releasing funds. We pride ourselves on being responsible lenders, and these extensive checks make sure our clients are able to take on the debt.

What can we provide?

At the time of writing, our packages are as follows:

• Residential – A maximum LTV of 75% can be provided on residential buy-to-let properties.
• Mixed – A maximum LTV 70% can be provided on HMO’s, refurbishment and mixed-use properties.

Commercial – max 65% on owner-occupied or investment commercial property.

Types of loans

At SDKA, we provide 3 types of loans. These are explained below:

Serviced: You are charged monthly instalments in line with the agreed interest rate. In order to be eligible for this type of loan, you must show sufficient regular income or rent to cover these monthly payments and repay the loan.

Retained: All interest payments for the duration of the loan are deducted from the initial loan as a lump sum at the start of the loan period. This means you have less available funds on day one, but you do not have to pay interest payments each month.

Part-retained: Part of the interest is retained and deducted from the loan amount at the beginning of the term. For example, a 12 month loan can be retained for 6 months. This means that you will receive a smaller net loan because 6 months interest is deducted, you will have only to pay interest after 6 months (i.e. from month 7 until the end of the term).

The type of loan that you are offered is dependent on your personal circumstances.

Fees

From the outset, we set out our fees as clearly as possible. In most situations, these are as follows:

• Legal and Valuation: These need to be paid upfront once the offer in principle has been issued.
• 2% arrangement fee: This is deducted from the gross loan amount at the point of drawdown of the loan and includes the fee payable to the broker in securing the deal. Occasionally, brokers will request an additional upfront fee if the case is complex and this will be shown on the loan documentation.

It is also important to note that we do not charge any exit fees, and we offer only a three month minimum term.

These are standard fees and assume that all payments of interest are made on time. Additional fees may be incurred where payments are not made on time, and it is important to communicate with us if you anticipate any missed payments to avoid further charges.

How fast can we provide bridging loans?

We understand that our borrowers may require money at very short notice, and we take speed of delivery very seriously.

All bridging providers claim to be fast, but  our team’s experience and expertise means that we are able to consistently get proposals out to you in hours. Alongside this expertise, there are many things we do here at SDKA that set us apart from the rest of the industry. 2 such examples are listed below:

• In-house legal: Scot is our very own legal expert. With expertise gained from world-class education at both Oxford and Cambridge alongside extensive industry experience as a partner of a London law firm, his insight on complex matters saves crucial hours in getting a proposition out to our clients. This means that there is a lot less back and forth with solicitors to clarify specific points – he can address most issues directly as a qualified solicitor of over 15 years.
• Automation: By harnessing the latest technology, we have been able to remove manual tasks such as copying across data. Not only does this make the underwriting process faster, it also removes human error and ensures accuracy every single time..

Our excellent track record can be found through our “case studies” page.

Closing remarks

Hopefully, this blog has been useful to improve your understanding of the world of bridging finance. The type of loan you are offered is dependent on your individual circumstances, and when you submit your case to SDKA, our team of underwriters will craft a bespoke offer.

So, if you are unsure whether you qualify for a bridging loan, you can contact us directly for an initial consultation, even if you aren’t a UK resident! Don’t hesitate to get in touch…

We can be reached at 0161 706 1190 or via email at welcome@sdkaltd.com.