How does a 100% bridging loan work?
“How does a 100% bridging loan work?” is a question many people have been asking recently thanks to the growing popularity of bridge finance. A 100% bridge loan is one that worth the entirety of your property’s value rather than just up to 80% of it. With this kind of loan, there’s no need to worry about finding a deposit. However, you will need to secure the loan against other assets. Read on to find out more about 100% funding and bridge loans.
Why is it difficult to get a 100% bridge loan?
It can be hard to get a 100% bridge loan because some lenders see them as more risky. It can also be difficult to get one if you don’t have additional assets to secure against the loan. These loans can also be more expensive because of the extra risk for the lender. Read more here about high LTV loans
How can I make it easier to get a 100% bridge loan?
You may have a better chance of getting a 100% bridge loan if you work with an experienced broker. At Bridge Loan Direct, we have a great deal of experience in helping people who wanted to take out 100% finance bridge loans.
A strong exit strategy can enhance your chances of getting 100% property finance options. The location and value of the property can also play a big role in determining whether you’ll be accepted, as can the other assets you’re securing the loan against.
Is a 100% bridge loan right for me?
There are several things you need to think about before you go ahead and apply for a 100% loan-to-value bridge loan. These include your ability to repay the loan on time and whether you can afford the higher interest rates. You’ll need a very strong exit strategy that convinces the lender of your ability to repay. The exit strategy could come in the form of selling the property, refinancing it with a mortgage or getting a lump sum like an inheritance or a pension payment.
You’ll need to have a clear plan for using the funds and securing long-term financing at a later date. Will you be refinancing with a standard mortgage? Selling the property or another house you own? Or are you expecting a cash windfall like a pension payment or an inheritance? You should also think about whether you want to risk losing the assets you’re using as collateral.
What are the risks of taking out a 100% bridge loan?
You could lose your collateral if you can’t repay a 100% bridging loan on time. The fees and penalties can be tough, and your credit rating could be hit hard. An honest and impartial bridge loan broker can help you come to the right decision and identify the best solution for your financial needs so you’re not creating big problems for yourself further down the line.
How can I get a 100% bridge loan?
As well as valuable assets to secure the loan against and a strong exit strategy, you’ll also need to provide various forms of documentation. We can advise you on the paperwork you’ll need, which could include payslips, bank statements, ID, tax returns and credit reports. You may need to provide more paperwork than you would with a conventional bridge loan due to the extra risk the lender is taking on. Your asset or assets will also need to be valued.
What kinds of assets can I secure a 100% bridge loan against?
As well as property, you could secure the loan against valuable items like cars, jewellery, artwork and investments.
Are there any other fees I need to consider?
Other fees which you’ll need to cover include underwriting fees and arrangement fees. These might be a bigger percentage of the loan amount than normal. You might be able to roll up your interest payments until the end of the loan term.
There is also lots of useful bridge loan information and advice on our blog.
Talk to Bridge Loan Direct today
At Bridge Loan Direct, we can help if you have been thinking about “how does a 100% bridging loan work?” and wish to find out more about your options. We have lots of experience in this area and have enabled many people to borrow even when they didn’t think this was possible. We will do all we can to connect you with the right lender and solution for your specific requirements.
