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Bridging Loan For Property In Spain

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Bridging Loan For Property In Spain 

Our bridging loans service provides:
  • Market leading bridging loans from £50,000 to £25m
  • Rates from 0.55% pm
  • Lower rates for £1 million+ loans
  • Finance within 7 working days is possible depending on your circumstances
  • Terms from 3 months to 3 years
  • LTVs up to 80% (can be more if other assets in the background)
  • Interest roll up options
  • Residential (On a regulated basis), buy to let, HMO, investment and commercial properties considered
  • Light refurbishment finance (currently uninhabitable, under permitted development rules, require internal refurbishment)
  • Heavy refurbishment finance (extensions, basement digs, loft conversions, commercial to residential, barn conversions)
  • Bridging finance for business purposes (Pay HMRC tax bill, purchasing land or new premises, deposit for new purchase, business growth)
  • Alternative assets considered e.g. pension, investment porfolios, fine art, classic cars
  • Automated valuation option for properties under £1m
  • We provide a friendly, professional service to help you get the money you need at the best available rates
Call us on +44 203 900 4322 to discuss your requirements.

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Recent bridging loan rates we've secured for clients

Residential

Buying Before Selling?

Rates from:

0.55% pm

Downsizing/Upsizing

Releasing Funds From Your Home

Short-Term Lease Finance

Auction Purchase

As at 21st May 2024

Development & Refurb

Fast Finance

Rates from:

0.55% pm

Light & Heavy Refurb

Finance For Unmortgageable Properties

Land Purchase with planning

As at 21st May 2024

Residential

Large Bridging Loans

Rates from:

0.55% pm

Up to 80% LTV

Minimum Loan £500k

Minimum net income £100k

As at 21st May 2024

Contact Us

Thank You for your interest - please complete the form below and a member of our team will be in contact.

Property Bridging Loan Case Studies

Read through our 100+ bridging loan case studies, breaking down the details of how bridging loan transactions work in practice:

Bridging Loan with Multiple Drawdowns Secured for 18-Bed HMO Conversion
Bridging Loan with Multiple Drawdowns Secured for 18-Bed HMO Conversion
Area
Kent
Capital Raised
£1.2m
Case Study: Complex Bridging Loan for Spanish Villa in Just 6 Working Days
Complex Bridging Loan for Spanish Villa in Just 6 Working Days
Area
Staffordshire
Capital Raised
£1.48m
Case Study: 24 Month Bridging Loan Secured Against £23m London Home
24 Month Bridging Loan Secured Against £23m London Home
Area
London
Capital Raised
£6.5m
Fast Bridging Loan to Raise Deposit for a Larger Family Home
Fast Bridging Loan to Raise Deposit for a Larger Family Home
Area
London
Capital Raised
£215k
Bridging Loan Guarantor - How It Works
Bridging Loan With A Guarantor To Buy New Bournemouth Home
Area
Bournemouth
Capital Raised
£1m
Case Study: Fast Bridging Loan with Low Credit Score to Buy Before Sale
Fast Bridging Loan with Low Credit Score to Buy Before Sale
Area
North Wales
Capital Raised
£140k

Remember, bridging loan interest rates vary depending on your lender, loan-to-value, exit strategy, the current market, and other factors.

Why Clifton Private Finance?

We are bridging loan experts, and our advisers know the complex ins and outs of the bridging market. 

In fact, in 2022, we won two awards for our bridging service.

And we also won Bridging Broker of the Year 2023.

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Sam O'Neill

Sam O'Neill

Head of Bridging

Let us do all the hard work of finding the right bridging lender for your circumstances. 

We secure bridging finance for applications of all types, and we negotiate competitive lending to meet your needs and timescale.

View Profile »

Written bySam O'Neill & Sam Hodgson
Last Updated
: 17/05/2024

In this guide:

Can you Get a Bridging Loan in Spain?


How Do Bridging Loans Work?


Lending Criteria


Deposit


How Much Will a Bridging Loan Cost?


Can I Buy at Auction?


Do You Need to Be a Spanish Citizen to Buy Property in Spain?


How to Get a Bridging Loan


FAQs

Bridging loan for property in spain

Can You Get a Bridging Loan in Spain?

Yes, you can get a bridging loan for a property in Spain. Bridging loans are short-term financing options that help bridge the gap between the purchase of a new property and the sale of an existing one or to finance a property quickly for other reasons.

These loans are available from local Spanish banks, international lenders, and specialized bridging loan providers. They usually require collateral, proof of an exit strategy, and an assessment of creditworthiness.

The application process typically involves a professional valuation of the property, documentation of your repayment plan, and details about your financial situation.

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How Do Bridging Loans Work?

Bridging loans are short-term financing solutions designed to manage cash flow gaps, typically for purchasing a new property before selling an existing asset. These loans, available for durations ranging from a few weeks to up to 12-18 months, come with higher interest rates due to their short-term nature and higher risk.

Once approved, funds are quickly disbursed, and interest can be paid monthly, rolled up to the end, or deducted upfront. Repayment occurs when the borrower secures long-term financing, sells a property, or receives other funds.

While bridging loans offer flexibility and quick access to funds, they come with higher costs and the risk of financial strain if not repaid on time, making a clear exit strategy crucial to securing the loan.

Ways to repay a bridging loan for a property overseas include:

  • Selling your primary residence- Planning to sell up and move to sunny Spain but can't secure a mortgage overseas? A bridging loan can allow you the flexibility to get settled into a new home before repaying the loan once you've sold your home in Britain.

  • Selling an investment property- Keeping your main residence but have a property portfolio or second home? If you're aiming to sell one of these properties within the next 12-24 months you can use the funds to repay your bridging loan

  • Selling a business or asset - Bridging loans are relatively flexible, so if you're awaiting the sale of a business or valuable assets (such as land, stocks, bonds etc.) these may all be used to pay back a bridging loan.

Watch our video below - Bridging Loans Explained: Costs, Timescales, Examples, & How To Get One.

What Are the Lending Criteria for a Bridging Loan?

The lending criteria for a bridging loan typically include using a property as collateral, with the property undergoing a professional valuation to determine its market value. Both residential and commercial properties can serve as collateral, with most lenders offering loan-to-value (LTV) ratios ranging from 65% to 80%.

A Well-Defined Exit Strategy

This is arguably the most important part of a bridging loan application. Bridging loans are offered on the basis that you have a surefire way to repay the lump sum in 12 months, so you'll need to ensure that your repayment method is foolproof. This could be the sale of the property, refinancing into a long-term mortgage, or another source of funds.

Evidence of Viability

Lenders need proof that the exit strategy is viable and realistic.

Credit History

While bridging loans are often more lenient than traditional mortgages, a good credit history can improve approval chances and secure better terms.

Financial Stability

Demonstrating financial stability and the ability to service the loan during its term is important.

Usage

Lenders need to understand the purpose of the loan, whether it's for purchasing a new property, funding renovations, or managing urgent financial needs.

You'll need to provide necessary documentation, including proof of identity, property details, and income statements, ensuring compliance with legal regulations. Additionally, borrowers should be prepared to cover associated fees, such as arrangement, valuation, and legal fees.

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What Deposit Will I Need?

Usually, you'll need to provide a bridging loan between 20% and 35%. The exact amount will be influenced by the valuation of the property used as collateral. Securing your bridging loan against a property with a higher value may mean that you can provide a low deposit as long as the LTV is acceptable.

It's also crucial to account for extra costs associated with purchasing property in Spain, such as taxes, legal fees, and administrative charges.

How Much Will a Bridging Loan Cost?

Bridging finance entails various costs, the exact amount of which depends on factors such as the complexity of your case, the loan size, and other considerations.

Here's an overview of typical bridging loan expenses and their workings:

  • Interest Rates

  • Valuation Fee

  • Legal Fees

  • Broker Fees

  • Arrangement Fees

  • Drawdown Fee

  • Exit Fees

Several factors influence bridge loan rates, including the loan-to-value ratio (LTV), the loan amount and duration, property condition and purpose, regulation status, property location, and credit history.

While bridging loans may incur higher costs, they often provide value by facilitating property acquisition or business needs. Clients frequently find that the profits from property refurbishment and optimal market positioning cover bridging loan expenses.

To see how much a bridging loan could cost you, use our bridging loan calculator below.

Bridging loan for property in spain

Affordable bridging loans exist, and a bridging finance broker can get you access to the best deals.

Can I Buy at Auction in Spain?

Yes, you can buy a property at auction in Spain. Property auctions in Spain are a viable option for purchasing property, often presenting opportunities to acquire properties at competitive prices.

These auctions can be held by banks, courts, or public institutions, usually involving properties that have been repossessed or are being sold to recover debts. To participate in an auction, you must register in advance and provide a deposit, typically around 5-10% of the property's starting bid price.

It's crucial to conduct thorough research before bidding, including visiting the property if possible, reviewing any legal issues or debts associated with it, and understanding the auction terms and conditions.

Additionally, having financing in place beforehand is essential, as auction purchases often require quick payment after a successful bid. Buying at auction can be an effective way to secure a property in Spain, provided you are well-prepared and informed about the process.

Do You Need to Be a Spanish Citizen to Buy Property in Spain?

No, you don't need to be a Spanish citizen to buy property in Spain. Foreign nationals, including individuals from non-EU countries, can freely purchase property in Spain. Spain has relatively liberal property ownership laws, allowing non-residents to buy property without significant restrictions.

However, foreign buyers must follow certain legal and administrative processes when purchasing property in Spain.

It's essential to work with local legal professionals and property agents who are familiar with the specific regulations and requirements for foreign buyers to ensure a smooth and legally compliant homebuying process.

Additionally, while citizenship is not a requirement, non-EU citizens may need to obtain a Spanish residency permit to stay in Spain for an extended period, especially if they plan to spend a significant amount of time in the country or reside there permanently.

Bridging loan for property in spain

How to Get a Bridging Loan for a Property in Spain

Typically, you'll need to speak to a bridging loan broker to get a bridging loan.

You can go directly to lenders, but not all lenders accept direct applicants. Also, most people use a bridging loan broker to guide them through the process, compare rates and get the best deal. Unless you've used them before, we generally don't recommend trying to go direct.

We can help with meeting tight deadlines & provide fast and professional bridging loan service.

Call our team on 0117 205 4833 to discuss your requirements or book an appointment below.

Book Consultation »

You can also use our 24/7 enquiry service through live chat. Contact us any time, and we'll get back to you as soon as possible - we reply to every message!

 

Bridging Loan Awards 2023

Bridging Loan Awards 2022

FAQs

Do you need a valuation for a bridging loan?

Yes, a valuation is typically required for a bridging loan in the UK.  

Since bridging loans are often secured against a property or other valuable assets, lenders will want to assess the market value of the property being used as security. This helps the lender determine how much deposit they want you to provide based on the value and condition of the property. 

How much can you borrow with bridging finance?

You can borrow up to £25m with bridging finance, but it’s typically capped at about 80% of the value of the property you’re using as security. 

It's important to note that different lenders have varying policies and criteria regarding the maximum loan amounts they offer for bridging finance. Some lenders have a maximum limit of over £1 million, while others may specialize in smaller loan amounts. 

Additionally, the terms and conditions of the loan, including interest rates and fees, should also be taken into consideration when determining the overall affordability of the bridging loan. 

Do you need a deposit for a bridging loan?

Yes, you typically need a 20-40% deposit for a bridging loan. 

It can be possible to get a bridging loan without a deposit (a 100% bridging loan), but you’ll need other assets in the background to secure the loan against, and more stringent criteria and higher costs could apply. 

Can I get 100% bridging finance?

Yes, it is possible to get a 100% bridging loan (also known as a 100% LTV bridging loan), but it is rare. This means that you won’t need to put down a deposit and can borrow the full value of your property.  

However, the criteria for these loans can be hard to meet, and you’ll need to provide additional assets as security for your loan. 

Interest rates and fees can also be higher to compensate. 

Does a bridging loan make you a cash buyer?

While using bridging finance doesn’t technically make you a cash-buyer, it can allow you to act like one.  

Mortgages take months to process, often leading to an ‘onward chain’ where all parties involved need to wait for funds to be transferred 

Bridging finance can usually be accessed a lot quicker than mortgages so you can bypass the onward chain, giving you an advantage over other buyers and being attractive to sellers.

What is the longest bridging loan term?

Bridging loans typically have a term of 12 months, but some lenders are willing to stretch their terms to 18 months, or even 2 –3 years depending on the case. 

Terms longer than 2 years will usually only be considered for specific cases.  

Can I use a bridging loan to pay stamp duty?

Yes, you can use a bridging loan to pay Stamp Duty.  

This amount could be covered by a bridging loan, providing you have a way to repay the additional borrowing amount to your lender.  

Are bridging loans safe?

Yes, bridging loans are safe when they’re used in the right circumstances with a solid repayment strategy. However, we recommend speaking to a qualified advisor, like our brokers at Clifton Private Finance, before you take out a product. 

The main factors to consider with bridging finance are that the full loan amount will usually need to be repaid within a year, and like a mortgage, it is secured against a property as collateral. 

This means that in the case that you aren’t able to repay your bridging loan, your property would be at risk of repossession.  

But with a watertight exit strategy, bridging finance can be an efficient way to secure property quickly. 

Can an 80 year old get a bridging loan?

Bridging loans are designed to be short-term so there’s no maximum age limit when applying for a bridging loan. This does depend on the lender, as some bridging lenders do have an upper age limit, but there are lenders on the market who offer bridging loans for borrowers aged 70 and over. 

What is the monthly interest rate on a bridging loan?

Bridging loan interest rates usually range between 0.45% - 2% per month, depending on the case and the market rate.

Unlike mortgage interest rates, bridging loan interest is calculated monthly instead of yearly.

This is because bridging loans are short-term and, in many cases, repaid within a year. Bridging loans can be arranged without early repayment penalties, so interest is calculated monthly to ensure you only pay interest on the months you have the loan for.

Do banks still do bridging loans?

Unfortunately, mainstream banks in the UK don’t offer bridging loans.

This means that if you’re looking for a bridging loan, you won’t be able to get one using a lender you’d find on the high street.

There are a variety of specialist lenders that offer bridging loans, but because these lenders are smaller and more niche, you may need a bridging broker to access them.

How much do banks charge for bridging loans?

Banks typically charge two main fees when taking out a bridging loan – arrangement fees and interest.

But there are other costs to consider such as valuation fees, broker fees and administration fees.

Costs can vary from lender to lender, and will also depend on what your bridging loan is for (e.g., residential or commercial purposes.)

Arrangement fees are what the lender charges you to take out the loan and can range between 1.5 - 3% of your overall loan. Bridging loan interest, on the other hand, is calculated monthly. This can catch borrowers out who may be expecting an Annual Percentage Rate (APR) like with a mortgage.

Can you turn a bridging loan into a mortgage?

Yes, you can convert a bridging loan to a mortgage through refinancing, and it is common among borrowers who use bridging finance to buy residential properties.

However, whether or not you’ll be able to refinance to a mortgage is dependent on your financial circumstances, the lender, and the property you’re planning to buy.

It’s important to be sure that refinancing is a viable repayment option before you take out a bridging loan on a residential property.

Is a bridging loan more expensive than a mortgage?

Yes, bridging loans are typically more expensive than mortgages.

Bridging loan interest rates can be much higher than a mortgage, and are calculated and displayed as monthly rates instead of the usual annual percentage rate (APR) that you’ll see on a mortgage.

However, bridging loans are a short-term solution, and you’ll only pay interest on the months you’ve borrowed money for – and you can repay early without any charges (for most loans).

There are many circumstances where bridging loans are an affordable option and a means to an end - for borrowers that need to finance a property purchase quickly, it may be the only option available.

How are bridging loans paid?

The two most common ways to pay a bridging loan are to sell a property or refinance to a mortgage.

You may also need to ‘service’ the loan through the term, which means paying the interest monthly. However, you can opt to ‘roll up’ your bridging interest to be repaid at the end along with the capital.

There are also other ways to repay a bridging loan, such as selling a business or even using money from an inheritance.

The method in which you pay your bridging loan can be flexible, just as long as it is clear in your application that you have a surefire way to repay your loan when the terms are up.

What is the minimum deposit for a bridging loan?

In most cases, a bridging loan will require a minimum deposit of 25%. However, the minimum can vary depending on the lender and the specific circumstances of the loan itself.

Generally, bridging loans are secured against a property or other valuable assets, and the deposit required is often expressed as a percentage of the property's value, known as the loan-to-value ratio.

In some cases, 0% deposit bridging loans are an option, but only if you have other property or assets in the background to provide additional security.

Do you pay monthly payments on a bridging loan?

No, typically, you’ll repay a bridging loan in one chunk at the end of the loan term. Bridging loans are a form of short-term finance and will usually need to be repaid within 12 months, but there can be room for flexibility.

In some cases, borrowers may be required to make monthly interest payments. This means that each month, you would pay the interest accrued on the loan amount while the principal amount remains outstanding until the end of the loan term.

But usually, the interest is "rolled up" or added to the loan balance and paid with the rest of the loan at the end of the term. This option can help protect your cashflow so you can spend it on moving costs or refurbishments, for example.

How long does it take for a bridging loan to come through?

Bridging loans can be arranged in as little as 7 working days.

However, it depends on the complexity of the bridge loan and your specific circumstances. It may also be more expensive for you to rush an urgent application through – but not impossible.

Bridging loans are a popular option for borrowers who are under time constraints, such as buying a property at auction or breaking a chain.

What is the criteria for bridging finance?

The key factors lenders tend to consider are:

Security - Bridging finance is usually secured against property or other valuable assets. Lenders will assess the value and marketability of your security.

Exit Strategy - Lenders will want to understand how you plan to repay your bridging loan. In most cases, this is selling your old property, selling the new property (flipping), or refinancing with a long-term mortgage.

Loan-to-Value (LTV) Ratio - Lenders consider the loan amount compared to the value of the property being used as security as a percentage. The LTV ratio can vary, but most lenders will have a maximum of 60-80% LTV.

Remember, the criteria for obtaining bridging finance in the UK can vary depending on the lender and your circumstances.

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