how much does it cost?
The valuation fee is the only cost up front. This is paid direct to the surveyor. Please note, in some cases, a maximum of £350 may be required to lock in the investor’s funds. This is refunded if we do not complete the bridging loan based on the information that was provided.
As a rule of thumb a valuation costs £120 per £100,000 of the value of the property.
Costs added to the loan
All other fees such as arrangement fees or legal costs are deducted (or added depending your preference) to your loan when you receive your money. These fees typically include:
Do you charge an early redemption or exit fee?
It depends on the deal and the safety of the planned exit route. If there is an exit or early redemption charges the maximum it would be is one month’s interest payment. The minimum is zero.
how can I pay interest?
You can opt to service the interest monthly or you can pay the interest back at the end of the loan.
The interest rate is a fixed figure displayed monthly. The interest does not compound. The interest does not fluctuate and it is not variable.
how long will it take?
Bridging finance is quick and the speed really depends on the speed of your solicitors. The time scale it takes to complete is often between 5-18 days and this depends on a few factors beyond our control such as 2nd charge consent if applicable and the availability of local surveyors and your solicitors. Should you require, we can place you with one of our paneled solicitors to speed up the process.
What if my case is urgent? Do you offer a fast track service?
If your case is urgent and you need a quick completion, please advise your broker or case handler as to the deadline date and the reason why, we will then be able to offer a fast track service.
who instructs the valuation?
It is highly recommended for speed and safety that the valuer is instructed by the Bridgecrowd. A borrower will get a better deal this way as the valuer provides an indemnity insurance to the investors.
However if a report has already been compiled then we may accept it provided that we are happy with the surveyor and it can be re-typed and the indemnity is attached.
what valuation figure do you work off?
On most deals we look at the Open Market Value of a property as valued by registered RICS surveyor from our panel. The 90 day value is taken into consideration, but this is not what is used in our LTV calculations.
If an asset is being purchased below the Market Value, most investors take a view that the value of the property is the agreed purchase price. There are exceptions to this rule and 100% of the purchase price will be obtained where additional security or comfort charges can be arranged.
what security will you lend against?
We will lend against all types of UK property including:
what’s the maximum loan to value?
There is no hard and fast rule as each deal is assessed on its merits. However, as a guide:
The max Gross loan to value on a 1st charge is circa 70% (and 80% on special circumstances).
The max Gross loan to value on a 2nd charge is circa 68% (and 70% on special circumstances).
We can even offer 100% of the value where additional security or equitable (comfort) charges are offered.
do you lend to people with adverse credit?
Often people seek a bridging loan as they have defaulted on their financial commitments and as a result have adverse credit. A bridging loan can be a good tool to help alleviate the financial pressure and allow clients the time and flexibility to return to a stable footing again and improve their credit.
what if I have no income or can not evidence the income?
This is acceptable as you do not have to service the interest or loan monthly - you can pay it all back at the end of the loan. The important point with a bridging loan is your ability to repay the loan at the end of the period.
Acceptable repayment methods are:
what can I use the money for?
You can use the loan for any purpose. The most common bridging loans are for;
Tight transaction deadlines
Often banks and high street lenders can-not facilitate a short term loan quick enough whereby it takes several weeks, often months to underwrite.
Banks will not lend
More and more banks have an inability to lend on non-standard mortgage deals. As such, bridging loans offers a quick, realistic process with decisions made by real investors.
Business cash flow
This takes many forms and is very common. Whether it is to fund a short term cash flow requirements or to purchase a new business or even to start a new one up then a bridging loan is often the quickest and most realistic prospect of raising the funds. With this loan the applicant will need to demonstrate that they can repay the loan either i) through the business or ii) through sale of the security or iii) another realistic repayment model.
Paying tax liabilities quickly or divorce settlements
We provide bridging loans to pay tax bills or to help in a divorce settlement.
Renovation or refurbishment of a residential, commercial or buy to let property
We are finding more and more that banks will not lend on properties that are in need of refurbishment or redevelopment. In this instance a bridging loan is the perfect tool to help finish the property.
Auction purchase – pre-approval required and fast completion
Often clients require pre-approval for a property that they wish to bid on at auction and need to complete within 14 days after successfully purchasing the property. In this instance, a bridging loan is the perfect tool to help facilitate the purchase. Often the exit strategy is to pay the money back by via a traditional mortgage.
Chain Break Finance
A classic bridging loan need – where a client has an offer on their property but wishes to purchase another (or put a deposit down) and funds are required quickly for a short period and repaid when the property transaction completes.
Converting a property from a dwelling into flats or vice versa.
Landlords who are equity rich cash poor / portfolio equity release
Many people and landlords have a lot of equity but cash may be tight. We will lend so that equity can be released from the properties in order to purchase new ones or pay off arrears and help the finances back on track.
Require a loan where interest is not serviced monthly
Interest on bridging loans can be serviced, rolled-up or retained. This means you can use the equity in a property to guarantee interest payments and these are paid on redemption.
Acquisition finance for business tenants to purchase their business premises from their landlord
Bridging loans for high net worth individuals
Large bridging loans for high net worth individuals for any purpose provided a realistic exit strategy.
Bridging loans for adverse credit applicants
Many people require a bridge because the banks and high street lenders have shut the doors firmly on anyone with adverse credit. A bridging loan is there to help get finances back on track and in doing, improve the credit scores.
Revolving credit facility (only on exceptional cases of low LTV’s and high loan amounts)
We can offer a bridging loan secured against a main asset whereby the charge is registered and remains in duration and this allows you to draw down in stages as and when required.
100% purchase price with additional security
The BridgeCrowd will advance 100% of the purchase price where there is additional security or comfort charges.
Many developers require a fund to reach the next level of a development before additional finance or a sale can be arranged.
how long can I borrow the money for?
From 1 month to 2 years.
what happens if I want the finance, but don’t need it quite yet?
Just let us know. We recommend getting all your ducks in a row first. For example, it would be wise to get the valuation carried out and lock the investors’ funds in so that you can draw the loan down whenever you need it.
what if I struggle to pay the loan back at the end the term?
Firstly, don’t worry. We are social lenders and we will work with you. On 95% of loans we allow a loan extension should it be required provided that the property market is in the same condition.
If you repeatedly fail to repay the loan, and after an extension, and still you show no signs of reasonably being able to repay the loan then your security could be at risk of re-possession. However, this measure will only be used in a last resort and we will work with you to find a suitable payment plan.
do you do regulated bridging loans?
Yes. We have funders who have the ability to offer regulated loans.
what if the valuation is lower than the anticipated?
Where the valuation is lower than expected, we will still offer the loan but we may reduce the amount accordingly within our guideline LTV’s.
do I need my own solicitors?
Yes. If you do not have your own solicitors we can recommend from a paneled solicitors who are expert at bridging and make the process quick and simple for you.
Can you recommend a solicitor?
Yes. We would recommend using one of our panel solicitors who are used to completing bridging loans so that the process is completed quickly. If you have a good relationship with your solicitor and wish to use them, then that is equally fine. The firm must have at least three partners and each individual applicant will need to seek separate legal advice from a different solicitor (it can be the different partners within the same firm).
what is an exit strategy?
An exit strategy is your plan on how you wish to repay the loan. Each loan will require at least one exit strategy.
Exit strategies vary. The most common repayment methods are:
what is the risk?
Any land or property offered as security may be at risk and may be re-possessed if you fail to maintain your financial commitments.
what is our aim?
BridgeCrowd is a growing group of like-minded people and businesses whose aim is to improve their finances through borrowing and lending between each other. By bypassing banks and connecting through technology real people make real decisions about bridging loans and benefit from better than market rates all secured over UK property.
what is a bridging loan?
A Bridging loan is typically used to cover shortfalls in funding or finances and it is “secured” against a property. Basically, like a short term mortgage.
who is a typical borrower? what do we lend against?
The type of borrowers that apply vary and range from property developers looking to renovate, refurbish, develop or buy new properties to business owners looking to improve their business. The one commonality in all of our loans is that the borrowers own a property that we feel comfortable to secure a 1st or 2nd mortgage over it.
We lend against UK property and land. The majority of our deals are over UK residential properties. We will consider securing over the semi-commercial and commercial securities if the loan to value fits are criteria. Our maximum loan to value is 70%.
how do we make money?
BridgeCrowd makes its profit from the spread in interest rate that is charged to its borrowers and the rate that it pays its investors. For example, borrowers typically pay interest at 1.25%, of which investors receive 1% per month and BridgeCrowd receives 0.25% per month.
do you have a secondary market?
Yes, and it is quite active
underwriting, fraud, valuations...
Risk, Underwriting and Fraud
The team have been lending and processing bridging loans for 15+ years and have a combined experience of over 50 years. Our background ranges from accountants, insolvency practioners, barristers, solicitors and loan underwriters. Their experience in bridging has taught them what deals to enter and what deals to turn down. Importantly we know the loan to value criteria’s for different styles of properties as well as when to allow a loan extension and when to re-possess. We have developed extensive due diligence processes and procedures as well as paramount fraud prevention systems. Of note, is that we have processed thousands of loans and millions of pounds and never lost any capital. meet the team
Valuations and Loan To Value
We always obtain an independent property valuation from one of our paneled or approved Royal Institute of Chartered Surveyors (RICS) that have passed our due diligence and compliance procedures. We check their experience and the level of their indemnity cover to insure against any negligence or under-valued properties. The valuer will physically visit and inspect the property and provide us with a comprehensive report and photos of the property that we are lending against. This will include details on the local market, and evidence of comparable recent sales for the property as well as any other specific requirements that are of importance.
The surveyors also provide an indemnity against the valuation that they placed on the security. This provides a secondary layer of security. Should the valuation be dramatically different from the sale price that is achieved should we foreclose and sell the property, then the surveyor’s insurance company can covers us for any economic loss after it has been mitigated.
Our Solicitors process over £45million of loans and repayments each month for some of the UK’s largest bridging lenders. Suffice to say, they are regarded as one of the specialist legal teams in the industry for both due diligence and recovery.
Our solicitors undertake additional due diligence on every borrower as well as the property security, title deeds, local searches and borrower's solicitor. Our solicitors draft the loan agreements that have been refined over years of experience as well as register the legal charge over the security (unless the clients solicitor is registering the charge).
We perform extensive due diligence on the borrower's solicitor insuring that they have appropriate indemnity cover and at least 3 partners.
In addition, every borrower is required to meet a solicitor in person and seek independent legal advice. The solicitor must meet the borrower and explain the loan agreement and the consequences of not repaying to borrower. This is done so that the borrower can not state they were unaware of what they were entering into and unsure of the potential consequences if they do not repay the loan. The solicitor also witnesses their signature of the loan and mortgage to ensure that the right borrower signs the contracts.
Borrower’s Due Diligence
We undertake an extensive variety of far reaching searches on the borrower (and the borrower's solicitor) to ensure that all parties and the statements of the borrower are backed up with evidence. We search credit reference agencies and undertake insolvency searches, courts searches, bankruptcy searches, and PEP sanctions. Additionally, our fraud prevention technology plugs into major credit agencies and we ensure that every borrower provides identification and documentation that is authenticated to high a level of security.
Hedge your risk
You have access to multiple loans and as such, you can spread your risk over multiple deals with varying repayment deadlines and interest rates.
what return can I expect and how long are the loans?
This depends on the loan to value and type of security, as a guide the following are the current returns paid to investors.
50% - 70%
|1st charge loans||0.6% per month||0.8% per month|
|2nd charge loans||0.8% per month||1% per month|
what is the risk? where does my money go?
Although to date we have not lost any capital, previous historical performance is only an indicator of future performance. Any investment carries risk and the value of the security can go up as well down. For example, if the property market collapses our loan to values will be closer to 90% / 100%. A good investment strategy would be to spread your funds out over a few deals to limit your exposure to any particular property.
are there any fees?
No, we do not charge investors any fees for membership or withdrawing funds and will not charge investors any fees, ever!
what happens if the loan defaults?
The default process varies on each individual loan. Sometimes we may extend the loan and on other times we may appoint receivers to re-posses the property and sell it in a timely manner. We always build into our loans the ability for the borrower to extend the term by a further reasonable period. This is especially important in cases where the borrower is selling the property and it is on the market or the borrower is arranging a re-finance and we feel that they are like to achieve this goal within a reasonable time frame. Should the property be on the market for some time and it has not had any firm offers we may ask the borrower to reduce the asking price. Where the borrower refuses to do such, we would then consider appointing receivers.
The decision of how to manage the loan and whether to allow an extension or appoint receivers rests with the BridgeCrowd. We will take notice of the investors’ opinions, especially if investors have a large stake in a particular loan, but we can not run the loans by the committee. As such – the management of the loan rests with the experience of the BridgeCrowd.
what happens if we stop trading or become insolvent?
Naturally we have no intention of doing so. However, if the BridgeCrowd were to become insolvent we have ring-fenced your investment.
Social Money Holdings Ltd is a non-trading vehicle that holds the loan agreements and mortgages with the borrowers in a trust on behalf of you, the investors. Should the BridgeCrowd stop trading or become insolvent, then your investments and the loans are ring fenced from the BridgeCrowd insolvency. Your loans would then be managed by the solicitors on trust (rather than the BridgeCrowd) until all loans are redeemed and the loan book is closed.
How does the referrals work?
The referrals and cash back scheme is where you are referred from one of our partners companies or where you refer friends, clients or colleagues. You will receive a £250 cash back reward for every referral made. The referral cash back can only be given when the referred investor has invested £5,000 or over into a new loan within 45 days of signing up. This offer is not valid for the secondary markets and for members of your immediate family or the same household.