Bridging loans are a popular way to develop a buy to let property these days if you need funds over a short period and loan can be used for any purposes.Bridging loan is secured by a charge on a borrower’s property. A bridging loan can be made to an individual or a limited company. 

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Traditional lenders, especially on buy-to-let mortgages, will often not lend on a property if there is no kitchen, bathroom, central heating or running water, i.e. if it is considered uninhabitable. A Bridging Lender, by contrast, will base its lending on the property’s value in its current condition.

Remember when applying for bridging loan you have an exit strategy is paramount. If the loan is at a high loan to value, then proof of the exit will be required.

Typically bridging loan criteria is flexible providing it makes sense a lander will look to lend. The Loan to Value ratios (LTV) are based on a property’s vacant open market value and do not take into consideration any goodwill or fixtures and fittings.

Typical loan to values are

Investment residential property Up to 70% LTV

Owner occupied / regulated Up to 65% LTV

Refurbishment Up to 60% LTV

Semi or fully commercial property Up to 50% LTV.

The interest rate may vary between lenders and is calculated taking into account a number of factors based around the element of perceived risk.

Whilst it is important that you borrow the money at the lowest rate possible, the fees also need to be taken into account as this will affect the overall cost of the borrowing.

Lenders will look up to £5,000,000 and bridging loans can be used for a multitude of purposes, including: distressed property purchases, bridging the purchase of a property, funding the acquisition of a buy-to-let property, off-plan property completions, refinancing or business use.

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