“What deposit do you need for a bridging loan?” is a question many people ask when they want to take out this kind of short-term finance. The deposit that you need to be approved to be taken out for a bridging loan can vary depending on factors like the lender you’re using and your current circumstances. Understanding deposit requirements helps when assessing fast bridging loans for time-sensitive purchases
The equity that you’re using to take out your bridging loan and the criteria your lender are asking are big influences on the deposit that you need. Learn more about equity requirements for bridging loans
Can I get a bridge loan without a deposit?
In most cases, you will need a deposit if you want to take out a bridging or short-term lending for buyers. This removes much of the risk for the lender. It’s common for the deposit to be between 20 and 40% of the value of the property.
Can I use collateral if I don’t have a deposit?
Some lenders will allow you to use collateral such as an asset if you’re unable to pay a deposit. These assets can come in the form of things like property, a car or an item of high value. The collateral value usually needs to be the same or more than the money that you’re borrowing from the lender.
Many people don’t have big cash deposit to put down when they need access to a bridge loan. This is why it’s so common for people to use collateral like houses and cars. Just remember that there’s a chance you could lose the asset if you’re unable to stick to the terms of the bridge loan. A big benefit of bridge loans is that you might be able to get access to one even if you have poor credit as long as you are able to use a valuable asset as collateral.
Am I likely to get access to a bridge loan?
Whether you’re likely to be approved for a bridge or bridging loan can depend on various factors. Lenders look at a number of factors when deciding whether to approve someone for a bridging loan. If you don’t have a sufficient deposit to lay down, you’ll need to use assets that you can secure the loan against. The asset could even be a property that you’re buying with the money you’re borrowing.
Your credit history probably won’t play the big role it does when you’re taking out other kinds of finance, but it can still have an influence. A good credit rating can reassure lenders that you’ll be able to stick to the terms of the loan.
Your loan-to-value ratio
The loan-to-value or LTV ratio may also have an influence if you are using a property as collateral. Lenders don’t normally offer LTVs more than 80%, so you may need to offer a deposit to cover the rest. Different bridging loan examples will help understand this concept in a more diverse and efficient way.
A strong exit strategy
You’ll also need to show the lender a strong and convincing exit strategy. This will reassure them that you’ll be able to pay the loan back on time. Most bridge loans only last for 12 months, though sometimes you’ll have 2-3 years to pay them back. Your exit strategy could be selling a property that you’re borrowing against. You could also remortgage a property you’re buying with a bridge loan.
Should I use a broker when I want to take out a bridge loan?
You can’t usually approach bridge loan lenders directly. This means you’ll need to use a broker who can navigate the market on your behalf and find you the best terms, conditions and rates. At Bridge Loan Direct, we have access to panel of over 300 lenders. We have a great deal of experience when it comes to helping individuals and businesses to access finance.
Can I use a bridge loan to put down a deposit on a property?
It’s not possible to use a bridge loan for a deposit on another property because mortgage lenders don’t accept loans from other lenders.
How much can I take out with a bridge loan?
It’s normally possible to borrow a maximum of 80% of the value of your property. There are many factors that can influence the amount you’ll be able to borrow. The factors can include your income, the strength of your exit strategy and the value of the assets you’re using as collateral. You might also want to check out how interest affects overall borrowing costs
When do I pay the interest on a bridging loan?
Although interest may be added to your bridge loan on a monthly basis, you normally pay this at the end the loan. If you’re able to repay the loan early, you’ll only pay interest for the months that you used for the loan. See, how interest structure affects total borrowing
Are bridge loans only used for property?
No. Bridging loans can be used to raise funds for a wide range of costs.
Are bridge loans easier to get than mortgages?
Many people find bridging loans to be much easier to acquire than mortgages. The work of a bridge loan broker can make the whole process very simple, and you could get access to the funds you need within a week.
Get bridge loan deposit advice today
At Bridge Loan Direct, we are here for you if you’ve been wondering “what deposit do you need for a bridging loan” and want to find out more about bridge loan deposits. We are here to help you get the best rates, terms and conditions for your specific situation. We want you to save as much money as possible when you’re taking out a bridge loan.
With decades of combined experience behind us, we can be trusted to deliver the swift and dependable service that you deserve. We have great relationships with some of the most trusted lenders on the market and can negotiate with them on your behalf to get you the right deal.
Use our bridge loan calculator today
Our bridging loan calculator at BridgeLoanDirect.co.uk makes it easy for you to find out how much your bridge loan is likely to cost. Just provide a few key details including the amount you want to borrow to learn more about interest rates and associated fees.
Whether you need a bridge loan to finance the purchase of a property, to expand a business or overcome a cash flow problem, we’ll do the best we can to help you put a suitable solution in place.
