A bridging loan loan-to-value (LTV) ratio is a financial measurement that shows the proportion between the value of a bridging loan amount from lenders and the assessed value of the property offered as collateral. A property bridging loan is a short-term finance option to bridge the gap between the purchase of a new property and the sale of an existing one, providing borrowers with the necessary funds during the interim period.
What is a Bridging Loan LTV?
A loan-to-value ratio (LTV) is a measurement that tells a financial lender how much of the loan is secured by the property as collateral. The LTV ratio is calculated by dividing the loan amount by the property’s value. For example, if you take out a bridging loan for £500,000 with an assessed value of £750,000 on the property offered as security, then your LTV ratio will be 66%.
What Influences Bridging Loan LTV Ratios?
- The timeframe of the loan: The duration of the property bridging loan can impact the borrowing terms if the project is considered risky. If the loan is used to buy a new property before selling an existing one or to complete a renovation or conversion project, then the loan may have a shorter duration and higher bridging loan interest rates than a loan used for other purposes.
- The purpose of the loan: The purpose of the property bridging loan can impact the borrowing terms if the project is considered risky.
- The type and value of the property: Different types of properties have different levels of demand, liquidity, and volatility in the market. For example, residential properties are usually more in demand and easier to sell than commercial or industrial properties. Therefore, LTV ratios for residential properties may be higher than for other types of properties.
- The borrower’s credit history and income: If an individual has a good credit score and regular income, their bridging loan LTV ratios may be higher.
- The lender’s risk: The lender’s risk appetite and criteria can vary depending on their business model, strategy, and market position. Some lenders may specialise in offering high-LTV bridging loans for niche or complex projects, while others may prefer to offer low-LTV bridging loans for standard or simple projects.
Maximising Your Bridging Loan LTV Ratio
It is possible to maximise your bridging loan LTV ratio by following a few simple steps.
- It can help that your credit score and income is in good standing, even though this is not a necessity, as this will help you secure the highest possible LTV ratio for your property bridging loan.
- You should also be aware of the lender’s risk appetite and criteria, as this will help you identify which lenders are more likely to offer higher LTV ratios.
You may also want to consider using a broker who can negotiate with multiple lenders on your behalf to find the best bridging loan LTV ratio for your project.
Alternatives to Bridging Loans
Other financing options may be available for those who are looking for alternatives to bridging loans. These include conventional loans, such as mortgages and home equity loans, and personal loans that do not require any collateral or assets. However, these types of loans may have higher interest rates or stricter repayment terms than bridging loans. TIC Finance offers tailored property bridging loans for your circumstances, and we guide you through the best options available for your specific situation.
What Are the Benefits of Bridging Finance?
Bridging finance can be an ideal solution for those who need to free up capital quickly and have access to funds that would otherwise not be available. Bridging loans are typically used as a short-term solution, with loan terms ranging from one to twelve months.
This short-term nature of bridging finance makes it a valuable resource for those who need to purchase property quickly or pay for urgent repairs or improvements. Additionally, bridging loans have a higher bridging loan LTV ratio than traditional forms of finance, which can make it easier to get approved and access the funds needed.
Need Financial Help? Whatever Your Circumstances, We Can Find You the Best Solution
We have many years of experience helping people secure property bridging loans in many situations and types of projects. Find out how we can help you today.
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Whatever type of bridge loan you need to suit your circumstances, we can help you. With our industry knowledge and expertise, this places you in the best care.
We provide a quick and easy application process for property bridging loans; all you have to do is call 020 3411 4451, fill out our quick and easy form, or send your question to our chat box on the right!
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