The question of “Can I get 100% funding?” remains constant after two decades of arranging specialist property finance.
The good news is that 100% funding is achievable if you know how.
While straightforward 100% bridging loans are not possible, there are proven ways to achieve full funding for the right projects by combining different funding methods.
This often works better, providing more control and sometimes better overall terms. The key is understanding how to structure these deals properly.
How Bridging Loans Normally Work
Most bridging lenders cap their loans at 75-80% LTV.
This means that borrowers are required to contribute a significant amount of their own cash, typically 20-25% of the property’s value, in order to secure the remaining 75-80% through the bridging loan.
This LTV restriction is in place to help mitigate the risk for lenders.
Bridging loans are designed to be short-term financing solutions, often used to cover the funding gap between the purchase of a new property and the sale of an existing one.
By limiting the LTV, lenders can ensure they have adequate security against the loan in case the borrower is unable to repay it as planned.
Read more: A Guide to Bridging Loans
What is 100% Bridging Finance
The term 100% bridging finance needs clarification.
In reality this means financing the full purchase price or property value with no cash deposit.
But bridging lenders still need adequate security, so to get 100% funding you will need to offer additional security beyond the subject property.
Many experienced investors use creative financing structures to get full funding. These arrangements often combine different types of security and multiple lenders to create solutions that standard bridging loans can’t.
Read more: Do you need a deposit for a bridging loan?
Get access to expert brokers and specialist bridging lenders
Ways to get 100% Funding
Property portfolios are the most common form of additional security.
Investors use equity in their existing properties by allowing lenders to take charges over multiple assets. For example an investor buying a £200,000 property might use an existing £300,000 portfolio property as additional security to secure a £200,000 loan against both properties.
Business assets are another form of security.
Manufacturing equipment, commercial vehicles or other business assets can support higher LTV lending. A business owner might use a 75% LTV commercial bridging loan and additional security from unencumbered business assets worth £100,000 to get full funding.
Mezzanine finance – a form of secondary lending that sits between senior debt and equity – can fill funding gaps. For example a project might combine an 80% first charge bridging loan with a 20% mezzanine facility but this will cost more as the mezzanine lender takes more risk.
Related: What does loan to value mean?
Who can get 100% Bridging Finance?
Track record and experience plays a big part in getting high LTV bridging finance.
Consider a property developer with 5 completed renovation projects over 3 years – this proven track record makes lenders more willing to offer higher LTV funding than a first time investor.
Asset rich applicants get more favour.
An established business owner with equity in trading premises or an investor with multiple unencumbered properties is a much stronger case for 100% funding. The FCA’s regulatory framework affects how lenders assess different borrower types, consumer borrowers are more strict than professional investors.
Uses for 100% Bridging
Below market value purchases offer higher LTV funding opportunities.
A property valued at £400,000 for £300,000 – lenders might offer 100% of the purchase price as it’s only 75% of the actual value, reducing their risk and meeting the buyer’s full funding requirement. These deals can be difficult to get away, as proving the ‘true’ value is sometimes up for debate.
Auction purchases require full funding quickly. With 28 day completion deadlines investors need full funding fast. An experienced investor might get 100% funding by offering a charge over their existing buy to let property and the auction purchase.
Businesses sometimes need full funding solutions. A retailer buying seasonal stock worth £250,000 might use the stock itself and their trading premises as security for a 100% bridging loan to maximise seasonal sales.
When purchasing a commercial property there is normally a large element of VAT to pay. This will not be included in the commercial mortgage calculations. A VAT bridging loan can be used to fund 100% of the VAT bill, until the refund is received.
Key to Approval
Exit strategy is key for high loan-to-value applications.
A property developer needs to show how they will repay the loan through detailed sales projections, backed up by local market analysis and comparable property values.
For business purposes financial forecasts and historical trading figures will support the exit strategy.
Documentation requirements increase with LTV levels. Lenders will typically request:
- Full asset and liability statements
- Detailed portfolio schedules
- Previous project case studies
- Business plans
- Evidence of experience in similar projects
Legal complexity increases with multiple charges.
Each security property requires separate legal work, with careful consideration of the order of priority between different charges.
Costs and Charges
High LTV borrowing comes with arrangement fees of around 2% of the loan amount, larger loans sometimes get lower percentage fees. Valuation costs multiply with additional security – each property requires a separate valuation, £500 for residential properties and several thousand for commercial assets.
Legal fees are dependent on the complexity of the arrangement.
A simple single property charge might be £1,000-£1,500 but multiple security properties can be £5,000+. Professional investors often factor in 5-7% of the total loan amount for all fees and charges.
The monthly charge for borrowing varies by lender and risk profile.
One upside is that you can sometimes negotiate (with the help of your broker) an interest rate reduction when you pledge multiple properties.
The reason?
The lenders overall loan to value can be quite low if the supporting property has a high proportion of equity, which reduces the risk profile and may allow for more favourable interest rates.
Quick Example
Let’s say an investor wants to buy a £500,000 property. Normally, a bridging lender would only provide up to 75% of the purchase price, requiring the investor to contribute a £125,000 cash deposit.
However, this investor has an unencumbered £800,000 property. By offering this existing property as additional security, the investor is able to secure a 100% bridging loan for the full £500,000 purchase price.
Even though the total loan amount is £500,000, the lender’s overall risk is lower because the £800,000 existing property provides ample security. This results in a combined loan-to-value of only around 50% when assessed across both properties.
Given the reduced risk, the lender may be willing to offer the investor a discounted monthly interest rate. This rate reduction can lead to meaningful savings over the lifetime of the bridging loan, helping to offset some of the higher upfront costs.
Read more: What is a cross collateral bridge?
Alternative Solutions
Bridging with a deposit is a simpler option when possible.
An investor with a 25% deposit will get a good choice of lenders and fewer complications than someone looking for 100% funding. The simplicity often means faster completion and lower overall costs.
Joint ventures is another way to get full funding.
A property developer with expertise might partner with an investor with capital, sharing both risk and reward. These need to be structured carefully – professional legal advice will help create clear agreements for profit shares, responsibilities and exit arrangements.
Development finance is for larger projects, can offer higher LTV funding through staged drawdowns. A developer doing a £1 million project might get up to 90% of the costs, funds released as the project progresses. This reduces the initial capital requirement and matches funding to project milestones.
Next Steps
Getting 100% bridging finance requires additional assets, careful planning and a good broker.
Start by gathering all information about your project, security and exit strategy. Collect evidence of relevant experience and have all documentation ready for the lender to review.
Working with an expert broker gives you access to specialist lenders and helps structure the application. Brokers know the different lenders appetites and criteria and will match your requirements to the right funding source. Their experience with complex applications is invaluable for high LTV applications.
Professional advice looks after you throughout the process.
A solicitor will ensure the security is structured correctly, accountants can advise on tax and financial planning. This professional support helps create robust applications and manage risk.
Ready for a chat? Just call us on 0330 030 5050 to get started.
Frequently Asked Questions
Yes, if you have sufficient additional security and can complete the arrangement within the auction timeframe (typically 28 days). You will probably needs to initially fund the 10% auction deposit yourself.
Read more: How to finance an auction property purchase
Yes, limited companies and SPVs can obtain 100% bridging finance. Lenders normally require personal guarantees from directors alongside company security.
Most lenders have minimum age requirements (typically 18 or 21) but many have no maximum age limit if the exit strategy is viable.
Yes, valuable business assets can support applications. Lenders assess their value, marketability, and depreciation rates when considering them as security.
Yes, though development projects often combine traditional development finance with additional funding sources to achieve 100% of costs.
Many bridging lenders allow early repayment without penalties. Check specific terms as some might charge exit fees or minimum interest periods.
