We are often asked whether HSBC do bridging loans. The short answer is they do, but not to UK customers.
If this is not the case, or if you’re seeking a commercial bridging loan, you’ll need to look into the alternative lending market. In the UK, there are over 40 lenders offering bridging finance. Very few of these are high street banks but specialist lenders with a particular focus on short-term lending.
Use our simply form to gain access to almost all of these, including access to many lender ‘exclusives’ not available on the general marketplace.
Compare market-leading bridging loan quotes with no obligation
- Loans from £20,000 to £30m plus
- Max 75% LTV first charge 70% second charge
- Secured on Residential and Commercial property
- Adverse credit considered
- Both Regulated and Non-Regulated Bridging Loans
Understanding What Bridging Loans Are
A bridging loan is a type of short-term finance that’s typically used to ‘bridge’ the gap between the purchase of a new property and the sale of an existing one. It can also be used to cover a short-term cash shortfall in a variety of other situations.
These loans are usually arranged for periods from a couple of months to a few years and can be invaluable in certain circumstances. For instance, if you’re buying a house at auction, a bridging loan can provide the funds you need in a short space of time, allowing you to secure the property quickly.
However, bridging loans are not for everyone. Their interest rates are typically higher than those for standard mortgages due to the additional risk lenders are taking. This is because if you’re unable to sell your existing property or find another source of income to repay the loan, the lender may end up having to take possession of the property.
Furthermore, while bridging loans can be organized relatively quickly compared to other forms of finance, they should ideally be viewed as a last resort rather than a first option. As the borrower, you should always make sure you have a clear exit strategy to repay the loan at the end of the term.
Remember, financial decisions should be considered carefully, and professional financial advice is always recommended before committing to a product like a bridging loan.
Do HSBC offer Bridging Loans?
HSBC does offer bridging loan solutions for qualified borrowers who can meet the bank’s lending criteria but not within the UK. Currently, this is something only advertised on their Hong Kong Website.
- Purpose – HSBC bridging loans can be used for various purposes, such as financing property purchases, capital raising for businesses, or funding renovations. The loan provides short-term financing while the borrower arranges for longer-term funding.
- Loan Amount – The maximum loan amount will depend on affordability and meeting HSBC’s lending criteria.
- Term – Bridging loans from HSBC are available for terms between 1 to 24 months. This provides short-term funding for the borrower’s needs until they can secure permanent financing.
- Interest Rates – The interest rate is based on the individual borrower’s circumstances and loan requirements. Rates are typically higher than standard mortgages or loans given the short-term, higher-risk nature of bridging loans.
- Security – HSBC requires the loan to be secured against a property or other assets. The property being purchased can be used as security in many cases.
- Repayment – The loan must be repaid in full at the end of the term, either through sale of a property, securing a mortgage, or by other repayment means arranged by the borrower.
- Fees – Arrangement fees, valuation fees, and legal fees may apply. HSBC offers representative examples on its website.
Key Features of HSBC Bridging Loans
HSBC’s Bridging Loan is a residential mortgage loan that aims to bridge the financial gap in purchasing a new property. The key facts statement (KFS) gives indicative details about the loan, but the final terms of the loan are defined in the offer letter.
HSBC Bridging Loans Interest Rates and Charges
For a loan amount of HK$3 million with a loan tenor of 30 years, the annualized interest rate varies based on the Bank’s Best Lending Rate (BLR). The maximum loan tenor for a Bridging Loan is 6 months. If the payment is not received on its due date, a default interest will be charged at 4.25% p.a. above BLR. There is no minimum amount of default interest.
HSBC Bridging Loans Monthly Repayment Amount
For the Bridging Loan, repayment is lump-sum at the end of 6 months. If the interest rate is 5% p.a., the total amount of interest payable at the end of 6 months (assuming 184 days) is HK$75,616.44.
HSBC Bridging Loan Fees and Charges
A cancellation fee of 0.15% of the loan amount is applied, with a minimum of HK$5,000. Other charges such as the change of mortgagor/guarantor/mortgage deed, request for each extra copy of statement, confirmation letter, repayment schedule/rate change advice/facility letter, annual interest statement, and late payment fee are also applicable.
A late % payment fee of 5% of the principal loan amount is levied if full repayment is not made on the due date. This fee is in addition to the default interest rate. There is no prepayment or early settlement fee.
Why Consider an HSBC Bridging Loan?
HSBC Bridging Loans are a practical and efficient solution for those who are in a transitional phase of property ownership. Here are some reasons why you should consider it:
- If you’re buying a new property and the completion date of the purchase is earlier than the sale of your existing property, a bridging loan can help ensure that you can secure the new property without waiting for your existing property to sell.
- It’s an ideal option if you’re seeking a short-term loan to ease your cash flow arrangement. This temporary solution can help you manage your finances effectively during the transition period.
- If you already have a home mortgage with HSBC for your existing property, obtaining a bridging loan from the same institution can offer streamlined processes and better understanding of your financial situation.
However, it’s important to consider certain conditions that might not make a bridging loan the best option for you:
- If you do not have Sales & Purchase Agreements (S&P) signed for both your existing and newly purchased properties, a bridging loan might not be suitable.
- If you don’t intend to mortgage the newly purchased property with HSBC, a bridging loan might not be the best choice.
It’s crucial to be aware of the key factors related to HSBC’s Bridging Loan:
- If the transaction of your existing property cannot be completed within six months, you must settle the bridging loan as scheduled and simultaneously repay the mortgage instalments for both your existing and new properties.
- Your application will be evaluated based on your credit report from TransUnion Limited, proof of income, other relevant submitted information, and the prevailing regulatory requirements in Hong Kong.
- It’s essential to understand your obligations and commitments throughout the mortgage period. Make sure to read the mortgage loan facility letter thoroughly, including the mortgage interest rates, payment frequency, repayment amount, number of instalments, and full/partial prepayment term.
- Note that if you face financial difficulties in mortgage repayment, an overdue/default interest will be levied on top of normal interest. If your payment cannot be resumed, HSBC reserves the right to repossess your property to settle the outstanding mortgage loan amount.
- You must arrange fire insurance with an acceptable insurance company to protect your property from depreciation due to structural damage during the mortgage period. This ensures coverage to minimize potential loss.
- If unfortunate events affect your home contents and your ability to repay the mortgage, HSBC can provide guidance on related protection.
What do I need to get a bridging loan with HSBC?
HSBC does not currently offer bridging loans to customers in the UK. However, here are some of the typical eligibility and requirements needed to obtain a bridging loan in general:
- Good credit history – Lenders will want to see a strong credit score and consistent history of repaying debt on time. Having defaults or missed payments can jeopardize your chances.
- Sufficient equity – To secure the loan, you will need equity in an existing property. Usually, 25-50% equity is required depending on the lender.
- Stable income – Proof of a reliable income source is necessary to demonstrate repayment ability. Employment income, investments, or business revenue can qualify.
- Clear exit strategy – Lenders want to see you have a solid plan to repay the loan at maturity. This may involve selling a property, securing a mortgage, or finding another repayment source.
- Acceptable property – If securing against a property, it must meet the lender’s criteria in terms of type, location, value, and marketability. Uninhabitable properties are usually not accepted.
Alternatives to HSBC Bridging Loans
We are often asked to recommend a ‘best’ lender for bridging finance, but the truth is every deal will have it’s own answer to that question. Depending on the size of the loan, what security you can offer, the LTV, and your exit strategy a range of different lenders will jostle for pole position. It’s not just the lowest rates which announce the best lender for you either; some lenders sneak in hidden charges further down the line.
In short, you need a finance broker such as ourselves with the whole of market access but with the knowledge of the lenders to match you with the right fit. We work with the following lenders:
- Shawbrook: Known for customised financial solutions in both the commercial and residential sectors.
- Precise: Specializes in rapid loan processing, ideal for time-sensitive financial requirements.
- Lendinvest: Utilizes technology to streamline the loan application and management process.
- Octopus: Offers a range of flexible lending options and is recognized for quick decision-making.
- UTB (United Trust Bank): Provides a broad portfolio of services, catering to diverse and complex financial needs.
- MT Finance: Focuses on niche areas such as auction finance and refurbishment loans.
- Spring Finance: Customer-oriented, offering flexible loan terms tailored to specific needs.
- West One: Features a suite of competitive products with attractive interest rates.
- Glenhawk: Stands out for transparency and straightforward fee structures.
- ABC: Emerging in the market with a focus on rapid service and adaptability.
- BFS (Bridging Finance Solutions): Offers both residential and commercial bridging loans with rapid decision-making.
- Affirmative: Specializes in quick, hassle-free bridging loans for time-sensitive projects.
- MS Lending: Offers competitive rates and high loan-to-value ratios, serving both residential and commercial sectors.
- Mercantile Trust: Known for secure and stable financing options, providing reliability.
- Roma: Features a simplified application process coupled with quick fund disbursement.
- Somo: Caters to businesses looking for higher capital loan amounts.
- Catalyst: Offers diverse product options for a wide range of financial needs.
- Mint: Focuses on high-quality client service and customized loan structures.
- Octane: Known for rapid and efficient loan processing and fund deployment.
- Ampla Finance: Targets small to medium enterprises with loan products designed for growing businesses.
Advantages of our Finance vs an HSBC Bridging Loan
- We have the whole of market access
- We offer commercial bridging, not just residential
- We can offer 1st, 2nd or even a 3rd Charge Loan
- Borrow from 100,000 to 250 million
- Access to the UK’s lowest bridging rates