Bridging Loans Scotland

Bridging Loan Scotland

A Scottish bridging loan (bridging finance) is a short-term loan for purchasing and refinancing property and land in Scotland.

How can a bridging loan in Scotland be used?

Bridging loans can be used to buy residential, semi-commercial, commercial and agricultural property and land in Scotland. Bridging loans can also be used to refinance an existing property. If you have a property investment opportunity in Aberdeen, Ayr, Coatbridge, Cumbernauld, Dundee, Dunfermline, East Ayrshire, East Kilbride, Edinburgh, Fife, Glasgow, Glenrothes Stirling or Airdrie, Greenock, Hamilton, Inverclyde, Inverness, Livingston, North Lanarkshire, Paisley, Perth, South Ayrshire & South Lanarkshire - we're ready to help!

Our bridging loan service

  • Market-leading bridging loans for buying property in Scotland and Scottish land from £26,000 to £250m
  • Monthly interest rates from 0.44% pm
    (Lower rates for £700,000+ loans or less than 50% LTV)
  • LTVs up to 80% (up to 100% finance if additional collateral is available)
  • Automated valuation options and dual legal representation
  • No monthly payments with interest rolled-up options 
  • Terms up to 24 months

Get a quote

We provide a fast, reliable service to help you get the bridge finance you need at the best available rates.

We consider all types of credit history, including non-status, bad or adverse and don't perform automated credit checks, so there's no footprint from enquiring.

With incredible relationships with the UK's top lenders, including specialist lenders, family offices and private investors, we can source the bridging loan you require:

up to £300k loans in 3 days
up to £750k loans in 7 days 
up to £250m from 14 days

Where your timeline is critical and short, we're confident we can get your bridging loan in place. Get your best no-obligation quote today.

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How our bridging loans can help

With property law being slightly different in Scotland versus the rest of the UK, other brokers sometimes have difficulty arranging bridging loans for refinancing or purchasing property in Scotland. We're different because we have exclusive products pre-approved by lenders specifically for securing funds against Scottish property and land.

Typically, our clients use us when short-term finance is required to bridge a gap in their funding. Our loans are often used to solve a cash flow issue after initiating a transaction. Without our bridging loan facility, it's likely their transaction wouldn't have been completed.

When you need to access funds fast, call us first.

We offer experience-based, impartial information, accessing quotes from the whole of the market to ensure your rates are as low as possible for your specific circumstance. We're experts in the complicated and package your requirements in such a way that our lending panel understands and can lend against. 

Bridging Loan Lending Criteria

Loan to value (LTV) Up to 80% maximum 
Loan term 1 to 24 months
Loan amount £26,000 up to £25m
Interest options Rolled-up, retained or serviced
Interest rates From 0.44%
Decision Immediate decision in principle
Completion 3 days to 2 weeks
Early repayment fees None
Availability Secured on assets in Scotland, the UK & Europe
Individuals, Companies, SPVs
No credit & adverse credit considered
Exit strategy Sale or refinance
Quick Enquiry

2024 Bridging Loans In Scotland Guide

Bridging loans in Scotland is a vital financial tool for individuals and businesses needing quick, short-term funding. This specialised form of lending is designed to "bridge" the gap between immediate cash flow requirements and the eventual acquisition of longer-term financing or capital.

With applications spanning property purchases, development projects, auction acquisitions, and urgent business cash flow needs, bridging loans offer a versatile solution in various scenarios where time is of the essence. Characterised by their short-term nature, rapid arrangement processes, and property-secured lending, these loans cater to a broad spectrum of needs, albeit with higher interest rates reflecting their perceived risk and temporary status. This introductory guide aims to unravel the intricacies of bridging loans within the Scottish legal and financial landscape, highlighting their purposes, features, and crucial considerations to navigate this dynamic sector effectively.

Bridging Loan Scotland

What is a bridging loan (in Scotland)?

A bridging loan in Scotland, much like in other parts of the UK, is a type of short-term financing designed to bridge the gap between an immediate funding requirement and the availability of longer-term finance or receiving funds from another source. Bridging loans are commonly used in real estate transactions but can serve various purposes, including Property Purchase, Property Development, Auction Purchases and Business Cash Flow.

Purpose of bridging loans

Property Purchase. Bridging loans can enable buyers to purchase a new property before selling their existing one, helping to avoid breaks in property chains.

Property Development. Developers use bridging loans to fund the purchase and renovation of properties before obtaining longer-term financing or selling the property.

Auction Purchases. These loans can provide quick financing for properties bought at auction, where buyers must complete the purchase quickly.

Business Cash Flow. Businesses may use bridging loans to cover short-term cash flow gaps or to take advantage of time-sensitive opportunities.

Features of A Bridging Loan

It's Short-Term. Typically, bridging loans have terms ranging from a few months to 24 months, though some lenders may offer terms up to 36 months or longer.

It's Quick to Arrange. One of the main advantages of bridging loans is their speed of arrangement, which can be crucial in time-sensitive transactions.

It's Secured on Property. These loans are usually secured against property or land, which means the lender can take possession of the asset if the loan is not repaid.

It has high Interest Rates. Bridging loans generally have higher interest rates than traditional mortgages due to their short-term nature and higher perceived risk.

It's Repaid in a lump at the end of the term. Repayment is often made in a lump sum at the end of the term, which usually coincides with the sale of a property or the receipt of longer-term financing.

Considerations in Scotland

 The legal system for property transactions in Scotland differs from that in the rest of the UK, so it's important to work with lenders and legal professionals familiar with Scottish property law.

Bridging loans in Scotland are subject to financial regulations overseen by the Financial Conduct Authority (FCA), and whether yours will be a regulated or unregulated bridging loan will be determined by who resides in the property being used as security or purchased. 

What's a regulated bridging loan?

A regulated bridging loan is a type of short-term financing that falls under the oversight of the Financial Conduct Authority (FCA) in the United Kingdom. The FCA's regulation ensures fair treatment, transparency, and protection for borrowers engaging in financial agreements, including bridging loans.

Regulated bridging loans apply to loans secured against properties that are, or will be, used as the borrower's or a close family member's residence. This can include loans to bridge the gap between purchasing a new home before selling an existing one or financing urgent property purchases, such as at auctions.

Does the FCA regulate Scotland?

Yes, the Financial Conduct Authority (FCA) regulates financial services firms and financial markets in Scotland and the rest of the United Kingdom. Whether you're looking for a bridging loan in Wales, Scotland or Northern Ireland, a regulated bridging loan will be subject to the governance of the FCA. The FCA is a UK-wide independent body that operates independently of the UK government and is financed by charging fees to financial services industry members. The FCA's mandate includes protecting consumers, keeping the industry stable, and promoting healthy competition between financial service providers. This means that financial products and services, including banking, investments, insurance, and lending (such as mortgages and personal loans) offered in Scotland fall under the FCA's jurisdiction and must comply with its regulations and standards.

Where is Scotland's FCA located?

The FCA office in Scotland is based in Edinburgh, and over 80 employees are currently based there. On 1 April 2013, the FCA became responsible for the conduct supervision of all regulated financial firms and the prudential supervision of those not supervised by the Prudential Regulation Authority (PRA).

Can you get a bridging loan in Scotland?

Yes, you can get a bridging loan in Scotland. Eligibility extends to both individuals and companies such as: 

  • a partnership (two or more individuals or companies)
  • a limited liability partnership
  • a limited company - such as a Special Purpose Vehicle (SPV).

What is the minimum deposit for a bridging loan?

In the context of bridging loans in Scotland or elsewhere in the UK, the concept of a "minimum deposit" is framed differently than traditional mortgage products. Instead of a minimum deposit, bridging loans are discussed in terms of the Loan-to-Value (LTV) ratio, which represents the loan amount as a percentage of the property's value used as security for the loan.

Loan-to-Value (LTV) Ratio

What's the Maximum LTV? Bridging lenders typically offer up to a maximum LTV ratio, often around 70% to 75% of the property's value. However, some may go higher for particularly strong applications or lower-risk scenarios. In exceptional cases and with additional security, some lenders might consider LTVs up to 80% or more. Conversely, if the security is land, this attracts a much lower LTV of 50-70%, depending on whether it's bare land without or has already obtained planning.

Effective Minimum Deposit

Given these LTV ratios, the practical minimum "deposit" — or, more accurately, the amount of equity a borrower needs — would be the difference between the property's value and the maximum LTV offered. For example, if a lender offers a maximum LTV of 70%, the borrower would need to provide 30% of the property's value in equity, either as cash down on a new purchase or as existing equity in the property. Another way to explain this is for every £100,000 of property value, the borrower will need to have £30,000 of cash or equity to put into the loan.

Valuations affect bridging loans

The valuation of the property will significantly impact how much can be borrowed. Lenders usually require a professional valuation from their surveyor panel to determine the property's market value. If your property has been valued lower than you'd hoped, you can increase the loan amount by offering additional security, such as a charge over another property. Offering more than one property as security is how borrowers can secure 100% LTV bridging loans in Scotland.

Purpose affects bridging loan AMounts Offered

The bridging loan's purpose or the project's nature can also influence the LTV ratio and, by extension, the equity requirement. For instance, development projects have a lower 65% LTV than a straightforward property purchase, which can go as high as 80% LTV.

Key Takeaway:

While there's no universally fixed "minimum deposit" for a bridging loan in the traditional sense, borrowers should be prepared to have a significant amount of equity in the property to meet lenders' LTV requirements. Prospective borrowers should also consider other costs associated with bridging loans, such as arrangement fees, interest charges, and legal fees, which can impact the overall financial feasibility of the loan. Consulting with a financial advisor or a broker specializing in bridging finance can provide personalized insights based on the latest market conditions and lender criteria.

Scotland bridging loan rates

Specific bridging loan rates in Scotland, like the rest of the UK, can vary widely based on a multitude of factors, including the loan amount, the loan-to-value (LTV) ratio, the duration of the loan, the type of property being financed, and the perceived risk associated with the loan. Bridging loan rates are typically between 0.44-2.00% per month, higher than traditional long-term financing options due to their short-term nature and the risk involved.

Indicative Rates

Bridging loan interest rates in Scotland can range from around 0.44% to 2.0% per month. 

Beyond the interest rate, borrowers should also consider additional costs such as arrangement fees (typically 1-2% of the loan amount), valuation, legal, and possibly exit fees. These can significantly affect the overall cost of the loan.

Getting the Best Rates

To secure the best possible rates for a bridging loan in Scotland, it’s advisable to:

  • Shop Around: Rates and terms vary between lenders, so comparing offers from multiple sources is beneficial.
  • Use a Broker: A specialist finance broker can help navigate the bridging loan market, leveraging their relationships with lenders to secure competitive rates.
  • Strengthen Your Application: Presenting a strong application with a solid exit strategy, good security, and a clear financial plan can help you negotiate better rates.

It's important for borrowers to carefully consider the terms and conditions of any bridging loan, paying close attention to the total cost of borrowing, including all fees and charges, not just the headline interest rate. Given the variability in rates and terms, the information provided here should be used as a guideline, and potential borrowers should seek the most current and specific data directly from lenders or through a financial advisor.

Which banks offer a bridging loan?

Like the rest of the UK, bridging loans aren't widely available from Scotland's traditional banks. Where they are available, they're restricted to regulated bridging loans with stringent lending criteria, making them challenging to secure. 

Does the Bank of Scotland offer bridging loans?

Yes, the Bank of Scotland offers one type of bridging loan, a regulated loan designed to help purchase a new home before selling an existing one. The loan would be repaid from the funds raised through the sale of the existing home, known as the exit strategy. The Bank of Scotland, like many other traditional banking institutions, doesn't offer flexible unregulated bridging loans for commercial use for several reasons tied to risk management, regulatory compliance, and strategic focus. We have an extensive network of private lenders, private equity firms and family offices who lend unregulated bridging loans for commercial use, such as property investment, in Scotland.

Is a bridging loan right for me?

In conclusion, bridging loans in Scotland represent an indispensable financial instrument for individuals and businesses needing swift, short-term capital. Tailored to bridge gaps in financing, these loans find their utility in various scenarios, from facilitating property transactions to bolstering business liquidity. Despite their higher cost attributed to the inherent risk and short-term nature, their rapid arrangement and versatility in application make them a valuable option in the financial toolkit. Whether seeking to leverage equity within property, expedite a purchase at auction, or secure a strategic financial stopgap, bridging loans offer a very real solution.

Get expert assistance today, we're on hand to answer any questions about bridging loans.
To find out the exact costs of a loan, call our friendly team on 01202 612934
We're ready to help.

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