Frequently Asked Questions
Novellus specialise in lending from £500,000 with no upper limit. As we use our own capital, each case can be individually assessed.
If the exact exit date is set prior to the loan being awarded, this is known as a closed bridging loan. If you know exactly when you are going to receive long-term funding through a property sale or mortgage approval, this is used as the exit date. These types of loans are considered less risky to the lender and will generally have more competitive rates.
An open bridging loan refers to a loan given when there is no exact date for repayment set. However, the loan period will be set prior to approval, which can usually be up to 12 months, during which time the loan must be repaid. If the borrower does not know the date they will secure further finance there is obviously more of a risk to both them and the lender.
A bridging loan is an ideal short-term mortgage solution if you want to buy a house quickly. If the chain breaks in the middle of the purchase a bridging loan will ensure that the sale can still proceed. It is also useful if you are thinking of downsizing, upsizing, buying a retirement home or any circumstance where you want to buy your new property prior to selling the old one. There are regulated lenders that offer bridging loans for this purpose. Novellus are able to help individuals looking to purchase a house as our loans are unregulated.
Bridging loans for extensions to houses can be arranged, particularly if you are looking to improve, restore or develop a property in order to sell it on or rent it out. There are lenders that offer regulated bridging loans. Novellus are able to help individuals looking to purchase a house for investment purposes only, as our loans are unregulated.
Yes, you can get a bridging loan to buy a property at auction. It is a common method for financing auction property purchases in the first instance, as loans are approved quickly, meaning a buyer will have access to cash fast. Auction properties often need to complete within a month and traditional mortgages will often take much longer than this to arrange, which may limit a buyer’s options. A bridging loan fills the gap, giving time to secure long term finance. This is one of the most efficient uses of a “Bridging Loan”. Novellus are able to help individuals looking to purchase a house for investment purposes, as our loans are unregulated.
One of the biggest factors when deciding on a bridging loan over traditional funding options is how fast bridging loans are from application to approval to final funding. Novellus has in the past been able to provide funds within 48hours of the initial application.
If you are in a position to pay the bridging loan off early, at Novellus you can do so without incurring any early repayment fees. You will also not be charged for the interest for the additional months save for the notification period of repayment. This is the difference when comparing bridging loans to a traditional mortgage where a charge is added for paying off the loan early.
It is possible to obtain a bridging loan with bad credit. You will have to undergo a credit check prior to a final decision being made, but not as much weight is given to the credit score system as is allotted by traditional finance lenders. The exit strategy is an important consideration; if your credit issues are likely to affect your chances of obtaining long term finance, your application is less likely to be approved. However, if the intention is to sell the property to finance the bridging loan, your application will be considered more favourably.
Up front communication in relation to historic credit issues helps greatly in the underwriting. We have lent to borrowers who had previously been bankrupt and understand that not all individual cases are the same. CCJs and historic financial issues will not mean an immediate rejection. We will try to understand why and believe that the past does not have to dictate the future. However, the more information we have up front will enable us to clearly communicate how we consider the risk and ensure that any issues can be swiftly dealt with before abortive costs might be incurred.
You will be responsible for an application, valuation and legal fee before the loan is drawn. However, there are no upfront fees charged from Novellus as the arrangement fee and interest are deducted from the loan at the outset.
It is possible to use a mortgaged home as security for a bridging loan, as long as there is enough equity left on the property to cover the loan amount. The first lender normally has to give their approval before the second charge loan is accepted as well. Although please note, in some circumstances (depending on the purpose of the loan), this may mean the loan will become regulated. Novellus cannot offer regulated loans but we will quickly advise if we believe your application will fall into that bracket once we have a better understanding of the circumstances.