Senior Bridging Loans
What is a Senior Bridging Loan?
A senior bridging loan is a large loan that allows you to complete the purchase of a new property within a tight deadline. Bridging loans have many purposes, but are commonly used by property developers and investors to purchase property developments up to 75% LTV with a view to rent out the property to tenants or fix it up and sell it for a higher price.
A senior bridging loan has 1st charge security against the property being purchased, which means it is first lien to being paid.
The loan term is a maximum of 24 months with different repayment options, often with rolled up interest and either repaid in full upon exit or refinanced at the end of the loan term.
A senior bridge loan can be used for residential or commercial properties and to purchase the physical property in the way a mortgage would be used. It is not used to purchase land or to cover project or building costs, this is a senior loan or development finance.
Is a Senior Bridging Loan Different From a Mezzanine Bridging Loan?
Yes, the maximum LTV for a bridging loan is 75% with Mera, with mezzanine finance often used to add additional capital to the project or development to 80% LTV.
Bridging loans are the 1st charge of security against the property and estate, whereby mezzanine finance is unsecured and lower in the priority of payment.
With mezzanine finance, the lender will charge interest (debt) and also receive a small equity in the overall project as part of taking on the additional risk of joining the project at a much later stage.
What Are Senior Bridging Loans Used For?
Senior bridge loans are used for residential and commercial properties including homes, flats, office blocks, rental office space, warehouses, garages, HMOs, student accommodation, hotels and more.
Mera does not offer senior bridge finance for heavy developments such as the construction of dams, airports, oil refineries and gas production or any projects with planning risk.
How Much Can I Raise With a Senior Bridging Loan?
Mera offers facilities of £1 million to £50 million with up to 75% LTV for residential properties and 65% for commercial properties.
The amount you can raise will depend on multiple factors including your deposit, other investors, value of the property, credit risk, exit strategy and more.
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What Are The Rates Charged For Senior Bridging Loans?
The interest rates are assessed on a project-by-project basis, and will vary depending on the level of risk, valuations, deposit and other factors.Other fees may be applicable including solicitor, valuation fees, arrangement fees, stamp duty and more.Exit fees may apply for ending the agreement early and before the end of the loan term.
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What Are The Loan Terms?
Commercial - up to 65% of the lower of the market value or the purchase price of the property
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