Borrower FAQs

A bridging loan is short-term finance designed to “bridge” the gap between a client’s immediate need for funds and their longer-term exit strategy. Unlike traditional mortgages, bridging loans are quick to arrange, often in days rather than weeks or months. At Somo, deals have been completed in as little as 48 hours when urgency matters most.

We can lend form £27,500 to £3,000,000. However, there is no hard and fast rule as each deal is assessed on its merits. How much you can borrow depends on the value of the property used as a security and other factors including your credit. A guide to our loan-to-values (LTV): • On First Charge loans we offer up to 75% LTV of the security • On Second Charge loans we offer up to 70% LTV of the security • We can also offer up to 100% of the value where an additional security or equitable (comfort) charges are offered. For example: On a first charge loan, if the property being used as a security is worth £100,000, we can offer you up to £75,000 (75% LTV). To find out exactly how much you can borrow, apply for a loan (www.somo.co.uk/apply)and we'll send you an offer.

Upfront costs There is a £350 lock-in fee required to secure the investor’s funds. This is refunded if we do not complete the bridging loan based on the information that was provided. A valuation fee is also required which is paid directly to the surveyor. As a rule of thumb a valuation costs £110 per £100,000 of the value of the property. Costs added to the loan All other fees such as arrangement fees or legal costs are deducted from your loan (or added depending on your preference) when you receive your money. These fees typically include: • An arrangement fee from 2% • Interest The interest varies depending on how long you use the loan, your repayment plan and the loan to value. Get in touch to find out more about the interest rates we offer. Early redemption or exit fees We will charge an early redemption or exit fee depending on the deal and the safety of the planned exit route. If there is an exit or early redemption charge, the typical amount would be one month’s interest payment. The minimum is zero. Representative example: Based on interest only bridging loan. If you borrow £100,000 over 1 year at a rate of 0.6% pcm / 7.2% p.a fixed for the term, you will pay 12 instalments of £600 per month and a total amount payable of £109,850. This includes repayment of the net loan, interest of £7,200, an arrangement fee of £2,000 and administration fee of £650. The overall cost for comparison is 9.85% APRC.

You decide. You can opt to pay interest monthly or pay at the end of the loan period - or a combination of both. Most Borrowers like to pay all their interest at the end of the loan term. The interest rate is a fixed figure displayed monthly. The interest does not compound. The interest does not fluctuate and it is not variable. Representative example: Based on interest only bridging loan. If you borrow £100,000 over 1 year at a rate of 0.6% pcm / 7.2% p.a fixed for the term, you will pay 12 instalments of £600 per month and a total amount payable of £109,850. This includes repayment of the net loan, interest of £7,200, an arrangement fee of £2,000 and administration fee of £650. The overall cost for comparison is 9.85% APRC.

Our minimum loan term is 1 month and maximum loan term is 24 months and up to 36 months for our Secured Business Loan product. To find our which product would suit you, get in touch.(https://www.somo.co.uk/apply)

As we are an unregulated lender, our loans can be used for business or investment purposes, including: Tight transaction deadlines Often banks and high street lenders cannot facilitate a short term loan quickly enough whereby it takes several weeks, often months to underwrite. Banks will not lend More and more banks have an inability to lend on non-standard mortgage deals. As such, a bridging loan offers a quick, realistic process with decisions made by real investors. Business cash flow This takes many forms and is very common. Whether it is to fund a short term cash flow requirement or to purchase a new business or even start a new one up then a bridging loan is often the quickest and most realistic prospect of raising the funds. With this loan the applicant will need to demonstrate that they can repay the loan either i) through the business or ii) through sale of the security or iii) another realistic repayment model. Paying tax liabilities quickly or divorce settlements We provide bridging loans to pay tax bills or to help in a divorce settlement. Renovation or refurbishment of a residential, commercial or buy to let property We are finding more and more that banks will not lend on properties that are in need of refurbishment or redevelopment. In this instance a bridging loan is the perfect tool to help finish the property. Auction purchase – pre-approval required and fast completion Often clients require pre-approval for a property that they wish to bid on at auction and need to complete within 14 days after successfully purchasing the property. In this instance, a bridging loan is the perfect tool to help facilitate the purchase. Often the exit strategy is to pay the money back via a traditional mortgage. Chain break finance A classic bridging loan need – where a client has an offer on their property but wishes to purchase another (or put a deposit down) and funds are required quickly for a short period and repaid when the property transaction completes. Conversions Converting a property from a dwelling into flats or vice versa. Landlords who are equity rich but cash poor / portfolio equity release Many people, including landlords, have a lot of equity but cash may be tight. We will lend so that equity can be released from the properties in order to purchase new ones or pay off arrears and help get finances back on track. Require a loan where interest is not serviced monthly Interest on bridging loans can be serviced, rolled-up or retained. This means you can use the equity in a property to guarantee interest payments and these are paid on redemption. Acquisition finance for business tenants to purchase their business premises from their landlord Bridging loans for high net worth individuals Large bridging loans for high net worth individuals for any purpose - subject to a realistic exit strategy. Bridging loans for adverse credit applicants Many people require a bridge because the banks and high street lenders have shut the doors firmly on anyone with adverse credit. A bridging loan is there to help get finances back on track, and in doing so, improve the credit scores. Revolving credit facility (only on exceptional cases of low LTVs and high loan amounts) We can offer a bridging loan secured against a main asset whereby the charge is registered and remains in duration and this allows you to draw down in stages as and when required.

We aim to approve loans, subject to a valuation and underwriting, within 30 minutes of your application. Once you agree to the decision in principle the completion time is up to you and your solicitors. The time scale depends on a few factors beyond our control such as second charge consent, if applicable, and the availability of local surveyors and your solicitors but we have been known to complete a case within 7 days. Should you require, we can place you with one of our panelled solicitors to speed up the process. If your case is urgent and you need a quick completion, please advise your broker or case handler as to the deadline date and the reason why, we will then be able to offer a fast track service.

Yes. Often people seek a bridging loan as they have gone over term on their financial commitments and as a result have adverse credit. A bridging loan can be a good tool to help alleviate the financial pressure and allow clients the time and flexibility to return to a stable footing again and improve their credit.

It is highly recommended for speed and safety that the valuer is instructed by Somo. Our borrowers get a better deal this way as the valuer provides indemnity insurance to the investors. However if a report has already been compiled, we may accept it provided that we are happy with the surveyor, it can be re-typed and the indemnity is attached.

On most deals we look at the Open Market Value of a property as valued by a registered RICS surveyor from our panel. The 90-day value is taken into consideration, but this is not what is used in our LTV calculations. If an asset is being purchased below the Market Value, we may lend up to 100% of the purchase price.

We will lend against all types of UK property including: • Residential property (unregulated) • Residential developments • Commercial property • Commercial developments • Mixed use property schemes • Offices • Retail • Land, farms and agricultural • Investment property – residential and commercial • Auction

This is acceptable as you do not have to service the interest or loan monthly - you can pay it all back at the end of the loan. At Somo, we will always look to lend as long as there is an asset (property) that can be used as a the security for the loan and a viable exit strategy. Acceptable exit strategies are: • Sale of the security or another property • Pension • Funds due from a business • Funds due from a divorce • Refinance onto a high street mortgage, a BTL mortgage or a commercial mortgage • Investments • Sale of other assets

We will work with you. Provided that you are trying to repay the loan and this can be evidenced and is realistic then we will often allow a further period of time for you to repay the loan. On 95% of requests from borrowers we will allow additional time to repay. This is of course subject to a satisfactory sign off from our underwriting department. If you repeatedly fail to repay the loan and, after an extension, you still show no signs of reasonably being able to repay the loan then your security could be at risk of repossession. However, this measure will only be used as a last resort and we will work with you to find a suitable payment plan.

No. Somo makes unregulated bridging loans and as a lender, the loans are not regulated by the FCA. Your loans are not covered by the Financial Services Compensation Scheme and you may or may not be able to refer any complaints to the Financial Ombudsman Service.

Where the valuation is lower than expected, we will still offer the loan but we may reduce the amount accordingly within our guideline LTVs.

Yes. We recommend using one of our panel solicitors who are used to completing bridging loans so that the process is completed quickly. However, if you have a good relationship with your solicitor, you are welcome to use them. The firm must have at least three SRA approved managers and each individual applicant will need to seek separate legal advice from a different solicitor (it can be the different partners within the same firm).

An exit strategy is your plan on how you wish to repay the loan. Each loan will require at least one exit strategy. For example: • Sale of the security or another property • Pension • Funds due from a business • Funds due from a divorce • Refinance onto a high street mortgage, a BTL mortgage or a commercial mortgage • Investments • Sale of other assets

Any land or property offered as security may be at risk and may be repossessed if you fail to maintain your financial commitments.

Simply fill in our short application form and one of our team will come back to you with a full credit-backed offer. If you are a direct Borrower: Apply for a loan (www.somo.co.uk/apply)here. If you are a Broker looking for a quote on behalf of a client: Submit a case (www.somo.co.uk/submit-a-case)here.