Bridging Loans

We are seeing more and more homeowners seeking advice after being missold bridging loans as a way to “stop repossession”, especially unregulated loans. A bridge loan merely offers short-term financial relief to those facing eviction and is not designed to stop home repossession. 

HMS will work with you and stop your mortgage lender directly or through the courts to help ensure that you and your family remain in your home

It is never too late even if eviction is only an hour away. Call 0800 298 0571

Why Avoid a Bridging Loan?

  • Huge fees

    In addition to repaying the loan, there are a number of fees that you will need to cover. These include arrangement fees, broker fees, and sometimes even exit fees, all of which can add up and become overwhelming very quickly.

  • High interest

    Compound interest added upfront and an even steeper default interest rate that comes into play after expiry will be built into your bridging loan. This interest accrues on a monthly basis and will make your loan harder to repay as more time passes.

  • It will delay and then worsen your financial problems 

    Especially if you are already struggling financially, extortionate added fees and interest will leave you with an overall amount to repay that you almost certainly won’t be able to cover. You will probably lose your house in order to fund the loan repayment, the very thing that the bridging loan company promised that it would help prevent. All that you will have done is delay the process.

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We help save your home by stopping your eviction, helping you clear your arrears negotiating with your lender.

Bridging Loans: a Flawed Short-term Solution

Bridging finance is a temporary form of financing that is becoming increasingly popular. Although bridging loans were initially designed as a way to help “bridge” the gap between a home sale and purchase, they are now often used outside this original intended purpose

Many homeowners facing eviction are currently taking out bridging loans for temporary financial relief. The problem, however, is that they are viewing these loans as a solution to their financial problems when they will often make their circumstances much worse

Every client we have helped with a bridging loan confirms they wish they’d never accepted it.

Get help today

A bridge loan is a short-term loan that allows individuals to borrow money pending the arrangement of longer-term financing or sale of the property. 

 There are two types of bridging loans:

  • A regulated bridge loan: a company has provided the loan under the regulation of the Financial Conduct Authority (FCA), secured against the property which the borrower currently occupies (or intends to occupy, if the loan is used for its original intended purpose).
  • An unregulated bridge loan (or commercial bridge loan): the loan being taken is not protected or regulated by the FCA, and is secured against a property that the borrower has or will never reside in. 

Unregulated bridge loans should be especially avoided. Your broker or lender may encourage you to sign forms to say that the loan is for “business (or commercial) purposes” in order to set up an unregulated loan. Some may even convince potential borrowers to set up a limited company to avoid regulation! 

Any loan that sits as the first charge on your residential property HAS to be regulated. Therefore, the bridging company will have to follow FCA regulations in the administration of your loan. A regulated loan is likely to take longer to arrange; however, it is likely to be less expensive and will take longer to evict you from your home when it expires. Importantly, the result is ultimately the same.

The main issue with a bridge loan is its short-term nature. You will not be evicted for mortgage arrears, but you instead will face eviction because the term has expired on the loan and the WHOLE debt needs to be repaid and you have failed to repay it. This makes the lenders’ position against you far stronger.

The difference between an expired bridge loan and a normal expired mortgage is the costs and the aggression involved. Whilst a normal mortgage provider will give you time to seek a proposal to resolve the case, a bridging loan company will act swiftly and ruthlessly to get their money. In fact, they will often escalate cases to the high court to expedite the eviction process.

You have ask yourself “what is in it for the bridging loan company?” and “what is in it for the broker?”. The broker is looking to make the most amount of money for the least amount of work. A lot of the other companies that claim to help with repossession are simply unregulated loan brokers

In the example below, you will see that the lender charges a huge amount of interest and pays the broker a handsome introducer fee for securing the client for them. We typically see broker fees of 3% added to the loan, as well as a further introducer fee of 1%. In the example below, it is equivalent to £8,000 and will likely be more if they have to create a delay to court action. 

Homeowners are currently being convinced that they should take out a bridge loan for 12 months and then remortgage back to a normal mortgage in 12 months’ time. In most cases we see, refinancing after the proposed 12 months period is simply not feasible and the bridging loan company and the broker has misled the homeowner. When companies refer to a bridging loan as a way to stop repossession, this is not the reality. A bridging loan typically results in you selling your house!

Bridging loans are also very expensive, and most have clauses for a “Default Interest Rate” which comes into force upon expiry. This interest rate is typically double the original rate and is charged to your account monthly. Bridging loans rise in terms of balance very quickly.

Bridging Loan Example

Below is an example of how a bridge loan works and why it will NOT prevent the repossession of your home:

  • You own a property worth £400,000 but you owe £200,000 on your mortgage that is in  £20,000 mortgage arrears.

  • You seek advice and are told that a bridging loan is the answer. A loan is offered to repay the £200,000 to your mortgage lender.

  • The loan is actually made up of compound interest added upfront at 1% per month for 12 months, and there are further administration costs and a substantial broker fee added to the loan. This equates to a loan of approximately £245,000 after 12 months.

  • This is equal to £3,750 a month, which is about £3,000 a month MORE than your original mortgage.

  • After a short 12 months, you are probably not in a position to secure a normal mortgage that is almost 25% higher than the last one you could not afford.

  • Following this 12 month period, it is also unlikely that you are ready to move and you will be charged a default fee of 3% followed by a 3% per month default interest rate.

  • Therefore by 18 months, your outstanding balance will be a staggering £296,450.

  • That will put you beyond most forms of being able to refinance the property and it will have to be sold.

  • By the time you accept the property has to be sold, it will take several months to coordinate, all the while now costing you over £7,000 per month.

  • The increasing cost will soon outstrip your equity and – this is the ideal scenario and design of the lender all along – if you don’t manage a sale, they will repossess you.

  • This process is worryingly a license to print money and that is why they will try to force you down an unregulated route.

Stop Repossession

Do not fall into this trap! Rather than seeking to profit from those facing eviction, HMS will work with your mortgage lender and stop home repossession directly or through court action. Contact us today and we will help secure a permanent solution to your financial troubles. Click here to get started, fill out a form or call 0808 298 0571.

If you have already taken out a bridging loan, we can still help. A bridging loan company can be stopped from taking your home away, but you need to contact us immediately before they take up all your equity in default interest and court costs.

What people have to say about Home Owner Management Services

Thank you so much for your help. We can now keep our home for the long term. We now have to pay our Lender a monthly payment we can finally afford after a year of turmoil. The hardest thing was unpacking all the boxes we had already packed because we thought there was no hope.

Everything you did for us was so quick and professional, our home was saved before we knew it, it took some time to sink in, but they really did achieve what we thought was impossible. In less than 24 hours of phoning them the eviction order was cancelled.

With the weight off our shoulders we can concentrate on living again and earning the money we need to pay the mortgage without living in fear of the Bailiff knocking on the door with an eviction order!

Mr & Mrs J W

I really can’t thank you guys enough. I was certainly headed for another breakdown, however, the sheer weight of your support saved me from despair and I am sat at home nice and  warm, in familiar surroundings thanks to you.

I can’t believe, looking back, how much time I wasted trying to convince the lender to let me stay, so many documents and offers, my only regret is honestly not phoning you sooner.

Mrs M

I really had my head in the clouds as I believed I now had no where to turn. I had already made my appointment with the council to assess me for emergency housing. However my council said they could only find me a hostel to stay in. 1 call to Aggressive Lender Solutions and I no longer had a problem.

They resolved the Eviction order in a matter of days, giving me every confidence that they could achieve it, every step of the way. I don’t know where Id be if they didn’t help.

Mr B
I was at a total loss at what to do with my situation, having been a mortgage broker, I was convinced I had the ability to talk to my lender and negotiate however; nothing I could offer was good enough!

They explained the process to stop the eviction and when it all came together it was like a case of De Ja Vu, it went EXACTLY as they said it would. They got me enough time to save up my deposit to go and rent, and I just let the lender have the house because I had negative equity anyway.

I am now back to a comfortable state of living and have no stresses anymore. I didn’t have to borrow any money from anybody because I didn’t have to pay the mortgage while I was saving up for my rent.

The best part was having the ability to remove my belongings at my own pace, and it not being done for me! I didn’t need to arrange storage or anything. I cant begin to express how grateful I really am!

Mr L

It is never too late to contact us, even if your eviction is only an hour away. Call 0800 298 0571