Bridging finance lending has seen a huge up turn in popularity in recent times with increased competition and a greater sense of pragmatism shown by lenders.
It is still deemed as short-term lending, but it can have a number of benefits.
- Bridging can be used for ‘flip’ projects. There are huge numbers of properties on the market that need renovation and can be bought at very reasonable prices. Bridging can be used to assist these types of purchases. The renovations may only take 8-12 weeks after which the property can be sold.
- Auction finance is often used by developers to buy investment properties. Auction houses usually stipulate completion within 28 day which often rules out mortgage finance. Several bridging lenders offer specified auction finance bridges designed to provide funding within the timescales set by the auction house
- Bridging can be used to purchase properties not deemed suitable by mortgage lenders. These can be purchased, renovated and refinanced post works onto a buy to let mortgage. In some instances, these can be refinanced within six months reducing the bridging interest costs
- Low value properties can be bought with the assistance of bridging finance. BM Solution did lend against properties as low as £40k purchase price, this has now increased to £50k. Properties can be bought less than £50k, renovated and refinanced to meet the lenders minimum value
- Development finance can be used in conjunction with bridging. This is appropriate for larger scale development where the bridge lender will stage release funds for a renovation project, for example office block conversion to residential flats. In some instances, the lender may ask for additional security. The overall loan is based upon the Gross Development value (GDV) of the finalised project. The development finance option can be applied to numerous projects.
Who is eligible?
Bridging finance is readily available for all types of applicants; from individual names to limited company structures. It is important when refinancing that the due diligence is undertaken to ensure the refinance is feasible. A Move can assist with the initial finance and the exit as well as providing advice on development finance and the opportunities this can provide.
If you are interested in a conversation about bridging finance, contact A Move Brokers on 01244-478-780 for a discussion and an impartial “whole of market” quotation.