Norwich Bridging Loans
Norwich Bridging Loans
Norwich, a delightful historic city in Norfolk, has many property types, from modern riverside developments to charming medieval-period homes. The cobbled streets and timber-framed houses in areas such as the Golden Triangle are where properties can sell for £1 million plus.
According to Rightmove, the average price of a property in the centre of Norwich over the last year was £230,000. Most sales were flats selling for £189,000, with terraced houses selling on average for £298,000 and semi-detached properties selling for £277,000.
Like in most cities in the UK, there are numerous opportunities in Norwich for buyers looking for bridging finance, whether it’s seizing investment deals, buying at auctions, buying commercial property, or funding property development projects.
What Is A Bridging Loan?
A bridging loan is a short-term loan designed as temporary finance until you can find a more permanent financial arrangement. It’s typically required when quick funding is needed to bridge a gap between the purchase of a new property and the sale of an existing one.
There are two types of bridging loan:
Open bridging finance - with this facility, there is no fixed repayment date, so the loan is repaid only when the funds become available.
Closed bridging finance - with this facility, there is a fixed repayment date. The loan is usually set up over 12 months, meaning you have to repay the loan before the end of the 12th month. A closed bridging loan is much more common than an open bridging loan, and it’s usually cheaper because there is a predetermined end date.
Whether it’s an open or closed bridging facility, how you repay the bridging loan is crucial. This is known as the “exit strategy.” Any lender will want to understand the exit strategy and be confident it is realistic.
With short-term finance, such as bridging loans, interest is charged monthly. Rates vary significantly, starting from circa 0.5% per month. There are also set-up costs where bridging loan lenders typically charge an arrangement fee of 2%. There are other costs, including valuation fees and legal fees.
Remember that you are offering a property as security with bridging finance, and if you cannot pay off the bridging loan in the agreed time, you may end up losing the property.
If the lender were to repossess your property, they would likely sell it for a lower amount than if you sold the property yourself. It makes sense for you to closely monitor the interest in the property you are trying to sell. If there is little purchaser interest, it might be advisable to reduce the asking price to ensure you sell within twelve months.
How Quickly Can I Get A Bridging Loan In Norwich?
It’s best to use the services of a specialist mortgage broker if you would like to get a quick bridging loan on a property in Norwich.
Ensure the broker is regulated and authorised by the Financial Conduct Authority (FCA). A professional broker will have relationships with several bridging lenders and should be able to find the best lender for your circumstances. Inevitably, speed is an essential factor, and some lenders have a reputation for being quicker than others.
To help your broker, you should be able to supply the following:
Details of the property you want to buy and the property you wish to sell.
A strong exit strategy.
A completed application form, ensuring every section is completed accurately.
A copy of your passport and proof of residency (a recent bank statement).
If you require a second charge, second mortgage, or second charge bridge, you need to establish with your current lender if they are required to consent for the bridging company to register a charge against your house.
If you have bad credit, you should disclose this to your mortgage broker as it is likely to impact which lender they put your application. Some lenders will allow adverse credit; depending on your credit history and score, you will pay a higher interest rate.
Lenders typically consider adverse credit as county court judgements or defaults registered against you. Any missed mortgage repayments are also likely to harm your application and result in paying a higher interest rate.
If you’re unsure if you have any adverse credit registered against you, it would be a good idea to approach one of the leading credit reference agencies in the UK - Equifax, Experian, or TransUnion for a copy of your credit report. Requesting a copy of your report will not hurt your credit score.
Ultimately, the time that it takes to complete a bridging loan application depends on several factors, including:
How quickly the valuation report can be completed. Some lenders will work to an automated valuation report, while others will insist on a full internal valuation. A complete internal valuation could add 2 - 3 weeks to the completion time.
What legal work must be done by solicitors, and how quickly will the solicitors respond?
How quickly you can return the paperwork requested by the lender.
How Do I Get A Bridging Loan In Norwich?
If you live in Norwich, working with a broker in Norwich would be preferable. However, this is optional, as most relevant paperwork can be emailed.
If you don’t know of a Norwich broker, you may want to search for a specialist finance broker who operates in the bridging sector.
Initial contact should be made by phone or email. It's important to highlight the timeframe you have to work with. An experienced bridging finance broker should tell you quickly whether the required completion date is achievable.
For more information about bridging loans in Norwich or anywhere else in the UK, contact our expert team today.