A bridging loan is a short-term loan which is secured against property and designed to ‘bridge the gap’ until either longer-term finance can be arranged, or an underlying security property is sold.

Bridging loans are quick to arrange, highly flexible and used for a wide variety of purposes. The speed with which they can be written makes them ideal for funding auction and other time-constrained purchases. Other common uses include refinancing property development loans, capital injections into businesses, refurbishing properties and much more besides.

A development loan is a short-term loan used to provide property developers and investors with funding for the purchase and construction, conversion or renovation of a property or multiple properties. Most development loans will cover 100% of the build costs, funded in tranches in arrears as the build progresses, but only a proportion of the initial land or property purchase costs. The balance of the purchase costs will usually be covered by the borrower and potentially other investors/lenders on a second charge basis.

Development exit finance is used to redeem an outstanding development loan on a partially or fully completed development project. This type of loan is usually a short-term specialist bridging facility offered at a lower rate than the higher risk original development loan. In addition to a reduced rate, development exit loans based on the value of the completed project can also provide additional funding to complete a building scheme or free up capital developers have built up for investment in new schemes and projects. At Saxon Trust we offer two highly bespoke development exit products. Our ‘Market & Sell’ product is for properties that have reached practical completion, where the developer requires more time to market and maximise sale prices. Alternatively, our ‘Finish & Sell’ product is for properties which are at least wind and watertight but require additional funding to be completed before being marketed and sold. Saxon Trust development exit loans offer developers extra control and financial agility.

Refurbishment loans are a form of development finance created specifically for the purpose of refurbishing an existing property, without changing the primary use of the property. Saxon Trust refurbishment loans can be secured against residential properties and used for light through to heavy refurbishment works. Light refurbishments must be under 15% of the property value, typically involving cosmetic changes such as redecorating, repainting, or rewiring. Heavy refurbishments are projects which cost more than 15% of the property value, and typically involve significant structural works, often requiring planning permission and close attention to building regulations.

Conversion loans are a form of development finance, created to facilitate a change in the use of a property (most frequently, from commercial use to residential use). Saxon Trust conversion loans can cover 100% of the build costs and a proportion of the purchase price for a broad range of commercial to residential conversions. These loans are usually used for converting offices, retail stores, and farm buildings (such as barns) as well as a variety of other property types into houses, apartments, flats or HMOs.

Auction property finance is a type of short-term bridging loan used to purchase property at auction. Auctions typically require buyers to pay for the property in full within a relatively short period of time, often within 28 days of the auction. Auction purchases can enable developers and investors to acquire a property for well below its market value. Saxon Trust can offer indicative terms either before an auction at an agreed level or after the auction (assuming the property has been secured) based upon the final purchase price/winning bid and fees. A Saxon Trust auction finance loan can enable borrowers to take advantage of opportunities that might not be available through traditional financing channels.

Joint Venture (JV) development funding is a type of financing used to fund real estate development projects through a partnership between two or more parties. This type of financing is typically used by property developers who need additional capital to fund a project, but who don’t want to or can’t take on the full financial risk and responsibility of the project themselves. Typically, each funding partner will have a say in the management and direction of the project and will share in the risks and rewards of the investment. Saxon Trust will consider joint ventures with experienced developers, providing a higher loan-to-gross development value (LTGDV) and loan-to-cost (LTC) ratio than a typical development finance facility, in exchange for a share of the profits from the project in addition to interest on the loan. A joint venture loan can allow developers to combine Saxon Trust’s capital and property expertise with their own, potentially resulting in a more successful project and greater profits for both parties.

In simple terms unregulated loans are purely for business purposes and will often be secured against investment properties rather than a borrower’s principal residence. Saxon Trust only offer unregulated loans.

A first charge loan is the principal loan on a property. The first charge lender takes precedence over any other lenders including second charge or mezzanine lenders. Saxon Trust only offer first charge loans.

Stretch funding is a term used to describe the financing of a development project beyond the parameters of a typical development loan. It can be a particularly useful tool for property developers who are facing budget constraints and require additional funding to complete their projects. As it carries additional risk for funders, stretch funding invariably comes at a higher cost and can therefore impact upon the overall profitability of a project. Saxon Trust can only consider stretch funding in exceptional circumstances.

Mezzanine funding loans are a type of loan used in property transactions to provide additional capital beyond traditional senior (first charge) debt financing. A mezzanine loan is typically structured as a subordinated (second charge) loan that sits between senior debt and equity in the capital structure of a development project. Mezzanine loans can provide borrowers with access to additional capital without diluting the ownership of existing shareholders. Developers can maintain control of their ownership structure albeit at a financial cost. Mezzanine loan providers typically require a higher return on their investment than senior debt providers. Developers who want to spread their own limited equity across a greater number of simultaneous projects can benefit from mezzanine funding. Saxon Trust do not currently offer mezzanine loans.

We are happy to lend against urban, suburban, or rural properties provided they are in England or Wales. We will consider any residential, or mixed-use (semi-commercial) properties, including houses, flats, shops with flats above (provided the residential element is over 50%) and HMOs. We will also accept commercial properties as security provided the borrower is converting these to residential units. We will also finance the purchase and development of land with planning permission for residential or mixed use developments, although we cannot make loans for the purpose of solely purchasing land which does not have planning or an existing property.

We lend to UK residents, foreign nationals residing in the UK and in some cases to those who reside abroad. We will also lend to limited companies and trusts.

The depth of knowledge within our team means that we can consider all credit profiles, including those with adverse credit histories; provided the underlying security meets our lending criteria.

The highly experienced Saxon Trust underwriting team, who are all office based, ensure that funds are delivered in the shortest possible timeframe. Bridging loans typically take two to four weeks to complete but this timescale can be quicker in exceptional cases. Development loans tend to be more complex and usually take slightly longer than bridge loans. Key to fast turnarounds is all parties working closely together and the timely provision of all information we request. We will look to run as quickly as our clients want us to.

Saxon Trust can lend between £100,000 and £5,000,000 with more on an exceptional basis.

We can offer loans with serviced, retained or rolled interest. Serviced interest is paid monthly, retained interest is paid on redemption and rolled interest is added to the outstanding principal amount of the loan.

We always require a physical property inspection by a RICS registered surveyor. We offer an extensive valuation panel and can consider valuation retypes originally instructed by other lenders on an exceptional basis.

Yes, borrowers can pay back a Saxon Trust loan at any time. Our loans are typically subject to a minimum 3-month interest period (although this can vary as defined in the facility agreement), but after this we will rebate interest on a pro-rata basis in the event of early settlement.

We typically charge an arrangement of 2.0% whilst legal and valuation costs are payable directly to our professional partners. Exit fees are rarely charged on bridging loans but are more typical on development loans where they usually range between 1.0 and 2.0%. To commence the processing of a loan with us a minimum £500 application fee will be charged.

At Saxon Trust we look closely at the strength of each client's exit plan. Despite this, in the current difficult macroeconomic climate, we understand that issues can occur which are sometimes beyond our borrower’s control. On these occasions we will work closely with our borrowers to find a mutually acceptable resolution.

With direct access to decision makers and a highly experienced team of finance and property professionals we understand that every loan enquiry is unique and will require bespoke and tailored solutions. We are flexible when structuring each deal to make sure it works for all parties. At Saxon Trust we always look to build long-term relationships with our borrowers so please don’t hesitate to get in touch if you have any questions you would like to ask or would like to apply.