Property Bridging Loan Guide

www.fundingknight.com

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What is the eligibility criteria?

• Our bridging loans are available for:

• UK-based businesses

• Property or properties located in England and Wales

• First Charge security over the property

• Up to 70% LTV (Loan to Value)

The borrower must be one of the following:

• Limited company

• LLP

• Partnership

• Sole Trader

• Private investor.

The bridging loans can be secured on:

• Commercial property

• Industrial property

• Residential property (not owner occupied)

• Buy-to-let property.

The basicsYou can borrow from £100,000 to £1,000,000...

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Please note, we do not arrange Property Bridging

Loans on:

• “Unusual” properties

• Properties in remote location

• Farms, kennels, stables or other agricultural

buildings

• Pubs, nightclubs or cinemas.

(If your property falls into the last two categories, you

may be able to use a business loan instead. Contact us

to find out more.)

How much can we borrow?

You can borrow from £100,000 to £1,000,000, with

a maximum of 70% of the property value, known as

Loan to Value (LTV).

While we do have the facility for interest to be rolled

up into the loan this is subject to prior agreement and

the total debt including interest must not exceed the

maximum 70% LTV at the end of the Loan.

The term of the loan can be for anything from 3 to 24

months depending on your requirements.

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TThe interest rate you pay is dependent on two things:

1. The LTV

The reserve rate set is linked to the LTV for your application. To give you an idea of the rates you might pay,

please see the table below – these are the maximum rates.

LTV Monthly Cost

61-70% 1.0%

51-60% 0.95%

<50% 0.85%

The monthly compound interest rates above are MAXIMUM and include our monitoring fees.

2. The loan auction

During the loan auction (which can last up to seven days) our investors bid to fund your loan at the interest

rate they’re willing to offer. The bids with the lowest rates win. If there’s a lot of competition between

investors, your rates could be lower than your agreed maximum rate.

The bids with the lowest rates win...

How much interest will we have to pay?

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You will be borrowing directly from a number of individual and institutional investors. Our secure online

platform allows them to bid for a stake in your loan. Our investors will spend time comparing your and other

lending opportunities on our website. The people who invest in your loan will be placing their trust in you and

your project – and expecting to get their money back.

During a loan auction, investors who bid the lowest interest rates will win the opportunity to fund your loan. If

the loan isn’t completely filled by these bids, FundingKnight has partners who make up the remaining amount

of the funds – this provides you with certainty once your funding auction starts.

During a loan auction, investors who bid with the lowest interest rates will win the opportunity to fund your loan...

Who will finance our loan?

We charge an arrangement fee of 2%, which will be

deducted from the loan amount. We also charge a

monitoring fee – typically 0.25% per month – which

is included in your overall interest rate. There is no

separate exit fee.

You will need to pay for a professional valuation and

for legal costs in relation to the loan.

What are the fees?There will also be legal costs and a valuation fee. As a

general guide these should not amount to more than

1% of the loan amount, but this will be dependant

upon the circumstances of each application.

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Funds are typically available 21 days from application. If you have all of your documents prepared and

your solicitors act rapidly, it can be much faster – as little as 14 days.

You will receive your money when the loan auction finishes: typically the funds will reach your solicitors to

complete the property transaction on the same day. Please remember that property transactions always

require legal work and more complex transactions may take longer.

For more information on the process, please see ‘How can we apply?’

You’ll receive your money when the loan auction finishes – typically the funds will reach your account on the same day...

When will we get the money?

Our Property Bridging Loans provide fast, short-term funding to property developers, investors or

buy-to-let proprietors. You can use our loans for:

• Purchasing a property

Especially useful when you need quick access to finance, e.g. when buying property at auction.

• Improvements

Helpful for funding improvements to a property before you resell or let.

• Refinancing

Repay an existing loan secured on the property.

Properties must be commercial, residential (not owner occupied) or buy-to-let and in England or Wales.

For more information, please read our eligibility criteria.

What can we use the money for?

How can we apply?

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Here, you can read and accept our Borrower Agreement and Terms & Conditions, and make your loan application....

Your application2

Step one: Register and tell us some details

Once you’ve registered online, you’ll be able to sign

into your FundingKnight account. Here, you can read

and accept our Borrower Agreement and Terms &

Conditions, and make your loan application.

Step two: We’ll respond within one working day

If your application passes our initial review, we will

then agree the further supporting information we need

and help guide you through the rest of the application

process.

For more information, see ’What do you need from

us?’

Step three: Heads of Terms

Once we are happy we have all the information we

need, we will issue an outline of the terms, known

as Heads of Terms, so you have a clear indication of

our interest in your request before you incur costs on

valuations etc. Please note that Heads of Terms are

issued once we have completed satisfactory credit

reference agency checks.

Step four: Valuation and legal work

Once you have accepted the Heads of Terms, we will

arrange for an independent professional valuation to

be instructed. This is to confirm the current market

value of the property and make an assessment of any

risks associated with the property that would impact

on its suitability for a Property.

Bridging Loan

You will need your own legal representatives to act on

your behalf. We will arrange for our solicitors to liaise

with your legal representatives to start completion of

security over the property (or properties).

Please note that the costs associated with valuation

and legal work will be payable by you. We will be able

to give you an indication of those costs before the

valuation and our legal work is started.

Step five: Your interview

We will arrange for an agent to meet you at the

property to give you the opportunity to show them

your plans for the property and talk about your

experience in property matters.

One of our underwriters will also speak with you

about the information in the valuation, the results of

your meeting with our agent and talk you through the

way your loan will be presented to our investors.

Step six: Documents completed

We will need our solicitors to confirm that all the

security and loan documentation has been completed

satisfactorily and you will need to provide us with

details of the property insurance. You are now ready

to put your loan to auction.

For more information, see How do the loan

auctions work?

What do you need from us and why?

If you have all the information required ready when

you apply, it could speed up your application and give

you faster access to funds. To help you prepare, this is

what we’ll need:

• Application form

• Schedule of Tenancies (if appropriate)

• Personal Liability Statement for each borrower/

guarantor

• Any recent valuation and/or estate agents

particulars

• Disclosure of any other charges or loans that

are currently secured on the property (if any),

including:

Any supporting information to demonstrate your

background and experience with property.

During the auction you’ll be able to sign into your FundingKnight account and watch as investors live bid on your loan...

• Lender’s name and address

• Account reference

• Balance outstanding

• Any break/exit costs

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As you are asking a number of individual and institutional investors to fund your request, you will need

to give good reasons for them to support your Property Bridging Loan. It is important to get across your

knowledge and experience in property matters in your presentation.

The Presentation is divided in to 4 key areas. The commentary will depend on whether you are a Company,

LLP, Partnership, Sole Trader or Private Investor.

How do we put together our loan presentation

Your business:

A description and brief background about the business

(if applicable) and your involvement in property

matters. You have the opportunity to add other

documents describing the property itself and other

projects you have worked on in the attachments

section of the presentation.

Who you are:

Give the brief background of the directors/owners

(their experience etc.) and the management team (if

applicable). If the borrower is part of a group, provide

further information on this here.

Why you need the loan:

This detail helps with encouraging investors to bid.

Highlight the specific use of the loan and how it will

enable the project to move forward.

What makes you a good risk:

This is your articulation of why investors should trust

you to return their money.

Specific attention should be paid to the history of the

property/project, and how you see the loan being

repaid – including any exit contingency plans.

Focus on payment history in previous projects or debt

obligations, amount of funds personally invested into

the business by its owners, trajectory of performance

due to specific contracts or opportunities.

Honesty is the best policy; in the event of any adverse

credit history it is always better to mention this

upfront. You should assume that it is possible for

investors to unearth this information with so much

data available in the public domain.

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Honesty is the best policy...

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How do the auctions work?

An auction is where our community of individual

and institutional investors bid via our secure online

platform to fund parts of your loan.

If your loan isn’t completely filled by these bids, we’ll

make up the remaining amount of the funds. In other

words, you will always get your money.

The only factor not set in stone is the interest rate

you’ll pay. While you will have agreed on a maximum

interest rate, competitive bidding from investors

during the auction could push down your interest rate

and get you a better deal.

During the auction you’ll be able to sign into your

FundingKnight account and watch as investors live bid

on your loan. The investors who bid with the lowest

interest rates will win. Auctions typically last seven

days, but they can be shorter if you choose. As soon

as the auction ends, you will receive your funds via a

bank transfer.

Your moneyThe investors who bid with the lowest interest rates will win....

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How do we repay the loan?

Unless we have agreed to provide you with rolled up

interest, you will begin to make interest payments one

month from draw-down. This means there will be a

fixed amount of interest to pay to FundingKnight each

month, which we will then allocate to each of your

investors. Repayment of the loan capital is due at the

end of the agreed loan period.

Early repayment

You can make an early repayment of the full amount

of the loan, at any time, providing you give us 14 days’

notice. If the loan has been running for three months

or more at the date of repayment, there will be

no penalty.

What if we can’t repay the money?

If a payment is late, we charge a fee of £5.05 per day

and you will start to incur penalty interest. This fee

is deducted when the overdue payment is received.

At our sole discretion, we may waive this fee if the

payment is received up to four days late, for example

if the reason for delay is a bank error or similar and

you have kept us informed of what’s happening.

If you are encountering difficulties in making a

repayment, the first thing you should do is call

FundingKnight to discuss. With strong, coherent

communication, all parties can agree an appropriate

course of action and convey accordingly to your

investors.

If you miss repayments but fail to communicate with

us, we will take steps to move straight to formal,

legal debt recovery proceedings, through sale of the

property securing the loan and, if necessary against

the loan guarantors.

What if we need a loan for another project /

property?

Simply sign in to your FundingKnight account and

fill out an application. Alternatively, you can contact

your dedicated underwriter or a member of our team

and we’ll discuss how we can help. The application

process for a second Property Bridging Loan is also

much faster because we already have a lot of your

information on file.

We’re here to help

Any questions? Please get in touch with our friendly,

expert team.

Call us: 02392 985 267

Email us: info@fundingknight.com

With strong, coherent communication, all parties can agree an appropriate course...

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Contact usCorrespondence address

Enterprise House2nd Floor, 27-29 Market StreetEastleighHampshireSO50 5RG

Registered office

3 Acorn Business CentreNortharbour RoadCoshamPortsmouthPO6 3TH

All enquiries please contact

info@fundingknight.com or call us on 02392 985267

www.fundingknight.com