Bridging Loans
At 177 Mortgages we are not just mortgage experts. We can also help you find the right specialist finance product for your complex lending needs. Here are some of the ways that our Specialist Lending Department can help you.
Bridging loans
Bridging loans are a short-term funding option. They are used to “bridge” the gap between a debt that needs to be paid and a longer-term line of funding becoming available. A classic example would be a chain break: where a house needs to be purchased prior to the completion of the client’s sale. Unlike a standard mortgage, this type of loan is often spanned across two securities (usually the sale property and the purchase property).
As well as assisting a home mover this type of loan can be used by someone who may wish to refurbish a property before quickly selling it on. Or to fund a property bought at auction or purchase a property that the high street banks will not finance.
The uses for bridging loans extend well beyond the remit of a purchase – if a client needs money for a tax bill, to purchase a piece of land, help with the cash flow of their business or perhaps put an extension on their home – we can help.
What’s required
When looking to take out a bridging loan, the key thing is the exit strategy. This could involve getting a mainstream mortgage or a buy-to-let mortgage or indeed selling the property altogether. Bridging loans are more expensive than a mortgage – but they are a short-term funding option. They come in all shapes and sizes from a wide range of providers.
Downsizing property loans
Have you decided to downsize? Downsizing your home can help you to move closer to family or save money. Fewer rooms and less space will cost less to maintain and run. But the process of downsizing can bring a number of financial challenges and unnecessary stress and pressure. These can be eliminated with a downsizing loan. It will allow you to purchase your new home without the need to wait for the sale of your old home or from having to settle for a much lower price to speed up the sale.
What’s required
If you have found your dream home and want to secure its purchase but haven’t sold your existing property, then a downsizing loan can help. The application process is quick and simple, and the funds can be secured on either the old or the new property. You can usually borrow between £10,000 and £2 million – depending on the value of the properties. You will not make any monthly payments for the duration of the loan so your lifestyle will not be adversely affected. Once you have finalised the sale of your old property you simply redeem the loan with the proceeds.
Extending the lease on a property loan
If you’re a leaseholder, you own the property but not the land it comes on, and therefore, you’re leasing it from the landlord. If you want to extend the lease it can be expensive and most traditional lenders won’t help with borrowing when there are not enough years remaining on the lease. An extending lease on a property loan is a short-term loan to pay for a property’s lease extension.
What’s required
It’s a quick and straightforward process to go through, and bridging loans for a lease extension are a great way to get money quickly. To extend a lease using a bridging loan, you need to prove you are a leaseholder. You will need to have owned the property on a long lease for at least two years. Lenders will usually borrow about 75% of the property value. Starting from around £25,000 with no maximum limit. You will need a valuation on the property, provide security (usually the equity in the property), and have an exit strategy. This could be the sale of the property or returning to the traditional lenders to remortgage once the lease is extended. With this type of loan, the interest can be added to the loan, rather than a monthly payment. There are usually valuation fees, arrangement fees, legal fees and exit fees added to the loan.
Renovation loan
If you are looking to renovate a run-down property it can be difficult to find funding. If the property is not in a liveable condition, traditional lenders often won’t help with borrowing. A renovation loan is a form of bridging loan and is a short-term loan to pay for a property’s renovation. These can be for heavy refurbishments where building regulations and planning are required for example barn conversions, loft conversions, and large-scale property extensions or transformations. Or for light refurbishment where no regulations or planning on a property are required for example internal refurbishment or redecoration.
What’s required
It’s a quick and straightforward process to go through, and bridging loans for a renovation are a great way to get money quickly. Starting from around £25,000 you will need to provide security for the loan. Like all bridging loans, you must have an exit strategy. This could be the sale of the property or returning to the traditional lenders to remortgage once the lease is extended. With this type of loan, the interest can be added to the loan, rather than a monthly payment. There are usually valuation fees, arrangement fees, legal fees and exit fees added to the loan.
177 Mortgages Specialist Lending Team
It’s important that you seek Financial Conduct Authority (FCA) authorised advice when thinking about applying for bridging loans. The Specialist Lending Team at 177 Mortgages works with smaller family lenders and some of the large banks that are regulated by the FCA. The team will identify your lending needs and will recommend a funding arrangement tailored specifically to your needs. And like our mortgage services this service is fee-free.
Speak to our team about Bridging Loans today
Call our Specialist Lending Department on 0800 098 7177 or fill out the form below and we will be in touch.