Providing financial solutions designed for our clients’ specific needs is at the heart of VIAP Finance’s mission, and our new VAT funding facility exemplifies our innovative solutions in action.
Many traditional lenders are unwilling to provide VAT funding due to the high loan-to-value ratios it can create and the fact that a VAT obligation doesn’t offer an asset that it can be secured against.
Fortunately, our VAT bridging loans can enable you to overcome this obstacle without causing a material impact on your senior mortgage.
By lending based on a clearly defined structure, this innovative VAT funding model ensures that you can borrow without a second legal charge against your property.
Our cost-effective VAT funding solutions enable you to mitigate the impact of a VAT payment and avoid HMRC fines, with loans available from just £50,000.
We can also get your VAT funded within 48 hours of contract completion, enabling you to avoid cash flow challenges that can cause unnecessary stress on your business operations and create frustrating opportunity costs.
Upon completion of the loan term, HMRC directly repays the loan on your behalf, reducing your administrative workload.
Take advantage of an effective option for short-term cash flow management that boosts your LTV without a second legal charge against the property.
Our VAT bridging loans are for the purchase of a vacant commercial property via a newly VAT-registered SPV outside of a group.
If these precedents are met, then we offer a 90-day VAT bridging loan-term as standard with monthly interest rates starting from 1.25%.
You simply need to provide us with the following details, and we can draft you a Briefing Letter setting out the terms of your deal:
We can then deliver your VAT funding in four easy steps:
After the property transaction is completed, our team of tax experts will then work directly with HMRC to process the VAT reclaim. Typically, this occurs within 90 days and concludes the repayment of your loan.
Getting your VAT funded is a prudent way of managing your cash flow during the property transaction process and enables you to focus your capital on where you need it most.
If you would like to learn more about our VAT bridging loans, then please speak to our team today.
A bridging loan is a short-term loan used to buy or invest in property. These are typically up to 12 months in duration and are repaid when long-term funding is in place – which can be either a mortgage, or through the sale of the property or another asset.
They are fast, versatile, short-term property loans used in all kinds of property transactions; from downsizing in retirement, to flipping properties for a profit, to buying property at auction. The use-cases are numerous and varied.
For example, bridging loans are often used to buy a new home while you're waiting for your current property to sell - bridging your gap in funding.
Bridging loans can be arranged much faster than standard mortgages; however:
As bridging loans are secured against property, the risks are relatively small to your lender. This means interest rates are fairly low compared to other types of short-term finance.
Interest is calculated and charged monthly; however, if you can pay back your bridging loan early, you'll stop being charged interest on the same day you repay.
For example, if you take out a 12-month bridge but find you're able to pay it back after 6 months, you'll only be charged 6 months interest.
Interest can also be 'rolled up' within the loan, so you don't need to worry about monthly payments - instead, you can opt to repay the entire balance (loan and accrued interest) in one lump sum.
Broadly, the main advantages of bridging finance are:
In many cases, using a bridging loan can mean not having to rush the sale of your house while you buy a new property, and it can also allow you to move quickly in the property market and avoid missing out to cash buyers.
There is a range of different costs involved with bridging finance. The exact bridging loan cost will be dependent on the complexity of your case, loan size, and other factors.
Here’s a list of potential bridging loan costs:
The interest you repay on your bridging loan is calculated as a monthly rate instead of an annual rate, like with a standard mortgage.
Because of the short-term nature of bridging finance, interest rates are usually much higher than a typical mortgage, but you only need to pay the rate for a much shorter period.
Bridging loan rates are affected by several factors, including:
You can borrow up to 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.
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.
You can get a fast bridging loan within a few days. However, not all bridging loans can be arranged this fast, and it depends on your situation and the properties involved.
You will also likely need a broker to push an application through this fast, and it may incur additional fees from your lender and solicitor to expedite your case.
On average, most bridging loans take between 3 to 6 weeks to arrange as a standard timeframe.
Every bridging loan lender in the UK has their criteria that a borrower has to fulfil to qualify for a loan. Whilst most lenders look for low-risk borrowers, many others have niche areas they specialise in and can facilitate.
As a rule, there are two essential criteria you'll need to meet:
Since the loan is secured against property or other collateral, a lender won't need proof of income. Equally, your credit history won't affect an offer as long as any outstanding debts or adverse credit doesn't impact your ability to repay the loan. However, if you do have a bad credit rating, you may have to pay higher interest rates.
Other basic criteria you will need to fulfil include:
If you have any questions about your eligibility for a bridging loan, speak to one of our advisors who will be happy to discuss your situation.
It is fairly common practice to speak to a bridging loan broker for advice on taking out a bridging loan.
You can go direct 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.
