Your guide to Bridging Loans with special guest, David Coleman, Head of Sales at Positive Lending

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“The amount of brokers I still speak to on a daily basis and they go “oh, bridging what are we looking at.. 1% per month?”  But you know, rates start at just below 0.4% per month now. So the market has been massively changed.” – David Coleman

An introduction to our guest, David Coleman, Head of Sales at Positive Lending.

If you’re in the mortgage industry then you will know who David is, and following him on Linkedin is a must!

David brings a positive voice to the mortgage industry and to the specialist market. A father, partner, chef, Lego creator and part time DJ – he is a positive force of energy! Social media can be a powerful place as I met David on Linkedin and we have become friends through the platform.

David feels that people get very conscious about what they should or shouldn’t post on social media. People can still underestimate the power of social media, but as David discusses, the people you connect with become a part of your everyday life.

David is Head of Sales at Positive Lending, who specialise in bridging loans, second charge mortgages, commercial finance and specialist lending. 

There are lots of things happening that are emotionally driven. People are breaking up, people are losing their jobs, and therefore there’s lots of chains breaking down.  Even as late as the day before exchange, which is horrible to see. Bridging loans can be a fantastic solution when your chain breaks down, but you can use bridging finance for so many other reasons…

Listen in above for the full episode or read below for a key summary of our conversation.

What is a bridging loan?

It’s a short term loan, short term finance, and it does exactly what it says. It bridges the gap typically between a purchase or maybe an unpurchased property.

In a nutshell, a bridging lender will typically be comfortable lending on a security where a mainstream lender wouldn’t and there’ll be a reason behind that. It could be that the property is uninhabitable, it also could be someone’s purchasing at an auction and they’ve got a time restraint. It could be that they’re going to miss out on an ongoing purchase because there’s a chain break or their property has fallen through or it’s not selling quickly enough.

Property is often an emotional purchase, people have got their heart set on a property and a bridging loan can make that happen which we’re seeing a lot of at the moment.

What can we say to reduce the fear around bridging?

We’ve got access to a vast panel of lenders, around 40-50 lenders, and with that you’ve got lenders who will act on a quicker time scale. (They might charge a little bit more.)

An area where our expertise comes in is understanding our client’s background. We will look at the full picture rather than what’s just in front of them at that point. We get calls from people who have been speaking to other brokers, but the full background hasn’t been explored. For example a landlord with a property portfolio might have good equity meaning you can cross charge bridging against those properties.And by doing that, the rate is dropped, because the rate is typically driven by the LTV. It’s an overall proposition.

The other side of it is there’s more security. The client can borrow up to a hundred percent funding required. So actually sometimes the client doesn’t even need any of their own money to put into the pot! 

If you Google ‘bridging loan’ it’ll say it’s good for auction – it’s quick – but nobody really talks about those intricacies, like how creative the bridging process can be, and that’s where our team of experts come in because we deal with this day in day out. 

Explain a bit more about bridging loans and auction, is it something people want to explore?

The reason bridging is used in auction will be one to two reasons. One, you’ve got a time restraint, typically 28 days, although some auction houses are extending that now to give the client a little bit more breathing space, but you’d tend to find an auction if you’re fortunate enough to win the property that you’ve gone into bid on that actually you’ve got a time restraint on putting the funds in place. You’ll probably have to pay a deposit and a non-refundable fee. So if that finance isn’t in place, well then actually the clients are at risk of missing out on that money, losing the property overall, and they’ve just wasted their time and a lot of money.

So bridging finance can act on a quicker time scale. There’s certain ends in the market that actually specifically do auction finance bridging. But bridging typically is issued for that purpose.

Also, if you’re buying something for auction, there’s typically a reason that property’s gone to auction – it often needs a complete uplift. No surveyor is going to put a value on it. So it means no lender will lend on it. A bridging lender will because they can understand what the state of play with that security is now and what needs to be done to it etc.

Does affordability come into it?

Typically, affordability doesn’t come into it because on a bridge, the interest will be retained or rolled up. So a lot of the time you may have a client who’s affordability just wouldn’t work out for the loan size, their borrowing, but actually,  if the exit is the sale of the asset, the affordability is almost irrelevant because the bridge is going to come from the sale of what they’re actually purchasing. And with a commercial property, they’ll be interested in experience etc too.

Speak to an expert

We will work at times that suit you and your family, carrying out appointments via video call, telephone or email, giving you the benefit of first class service, around your own schedule, and in the comfort of your own home. So let us handle your mortgage today and find out how well we can look after you, The Mortgage Mum way!

If a client’s inexperienced, they’re a first time landlord, can they get a bridging loan?

Usually yes – because the lender’s got comfort that the client can exit that bridging finance.

If the client has never purchased a property before with a view of giving it a facelift and then flipping it on for a profit, there is a risk. The lender will want to understand who is doing the work, what’s their reputation, what their books look like etc. Many take a builder with them to an auction to help understand true costs and timescales of the project. The risk is the project takes longer than planned, and the bridge has no viable exit date, meaning there is a loss of money on any profit. There’s always going be something that crops up that delays things or costs a bit more money or both…

How long does it take to secure a bridging loan?

You can do bridging finance in a week. If you’ve got an automated or desktop valuation, if the client is ready to push the button, instruct solicitors on day one, I would say somewhere between two to four working weeks is an average. It does come down to the solicitors that are instructed. It comes down to the client being in the position to act as quickly as they say they need to. There can be some back and forth and conversations needed behind the scenes but when you’re up against the time restraint we can work with lenders who we know are completing other business around that time.

It’s about the customer understanding their journey. If they have got that mapped out and they fully understand it, then that really helps them understand what they need to do in order to get that bridging loan in place and then exit at the right time.

Exit is always the main thing. 

You have to know how you’re going to pay it back. If there’s no exit, we won’t entertain the deal. We are facilitating the exit strategy and we would never want to put a bridging loan in place where the client hasn’t got a viable exit strategy. They will just end up in deep water.

We can ask for extensions, directly from the lender, but with good reason, i.e. building works have over run etc. Some lenders entertain that but not all of them. 

What are the other costs involved? 

The number one thing the client needs to be aware of is that they would always be expected to pay for their survey and their own legal fees. 

If we can offer an automated or desktop valuation, we will do so for obvious reasons; It will save the client money and it will speed up the whole process and the maximum cost of a desktop or automated valuation is £99.

We do have lenders that will do dual legal representation, which actually tends to work out a cheaper and quicker option for the client. The lender will typically charge a 2% facility fee, which is added to the loan and there may be a lender fee which is usually in the hundreds, which is added to the loan.

We charge an application fee, but no other unnecessary fees as that just makes the bridging loan unattractive and less accessible. There’s no additional package fee charged if the loan is £100,000 or more which makes us quite unique in the market. And again, that’s added to the loan.

Is there a fee on exit typically?

No. Typically with bridging lenders there’s no exit fee. But most bridging lenders in the market will have somewhere between a one to three month minimum term. 

Are bridging loans always fixed rates or are they the same as mortgages where you can have fixed or is it calculated?

There is no fixed rate as such because it’s calculated on a monthly basis. 

Speak to an expert

We will work at times that suit you and your family, carrying out appointments via video call, telephone or email, giving you the benefit of first class service, around your own schedule, and in the comfort of your own home. So let us handle your mortgage today and find out how well we can look after you, The Mortgage Mum way!

So if you’ve had bad credit, does it mean basically you can’t get bridging?

Not at all. Like everything in any type of finance it’s going to depend on what your bad credit is.

If you’ve just recently gone bankrupt, that doesn’t mean you can’t get one, but you are going to have less chance of getting finance.

Not everyone in the market is going to be comfortable with adverse clients, but there are options for those clients and it doesn’t mean they can’t obtain bridging finance, which is why having an open and transparent conversation with your broker is useful and important.

Be creative

It sparks my creativity about business and property and that if you think creatively about the property market and how you can get involved, you shouldn’t dismiss yourself as someone that can’t get involved just because you don’t have hundreds of thousands of pounds.

Also, people that don’t qualify for normal finances, i.e. clients beyond traditional lending age, their income probably doesn’t stack up as well for their borrowing, but their home has had no work done on it for 10-15 years or more. They’re now in a position where they need to sell it because actually they’re going to move to care supervision. So in order to achieve the full asking value for what they want or what the property could actually achieve on the market, they’re going to need to do work. It needs a new kitchen, it needs a new bathroom, it needs a complete facelift. So the bridging loan is being used against that. They’ve got a very, very small mortgage outstanding on that property, so actually the bridging loan we took out means the work is being done. As soon as the work is finished, they’re able to put it on the market.

And the remainder of the profit from that property sale will allow them to go into their care supervision as they wish.

There’s no sales in what I do. I talk about helping others, raising awareness and how to recognise the opportunities in the market.

What is the best story that you’ve seen someone use a bridge for?

We’ve got some famous people on our books. One was buying abroad and the chain was going to fall apart and we helped a pair of footballers on an investment property – they had the money for renovations but not for the purchase. Once the survey was done, it was found that the back of the property needed underpinning. So actually the deal fell away. What they’d done was they negotiated with the vendor to see if they could get a reduced offer price, which they did. They purchased it with the bridge, which then allowed them to do the work, get the underpinning sorted out. Once the works were done, the surveyor revisited, was happy with the work and then they could get their mortgage.

The thing that I feel it’s about being brave, but it’s about spotting opportunities and being brave enough to take the opportunity of finance and do it.

The market, both in the broker side and also the consumer side is becoming a bit more aware of what bridging is. Probably partly to do with stamp duty because a lot of bridging was used to help with a quick purchase. There’s so many opportunities out there and there’s so many variants about how it can be used and how it can be structured and how it can be best placed.

Whether you’re someone who’s looking to buy a house or buy their first home or you’re an experienced developer or investor – bridging could be for you. So many people are using it in so many different ways. 


Thank you to David Coleman of Positive Lending for joining Sarah Tucker on The Mortgage Mum Podcast. Listen to The Mortgage Mum Podcast on all major podcast directories including Apple and Spotify. You can also catch up on previous episodes on our website and on The Mortgage Mum YouTube channel.