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.
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.
Not all buy-to-let mortgages, or loans and debt services are regulated by the Financial Conduct AuthorityThe value of investments and the income from them may go down. You may not get back the original amount invested.Your home may be repossessed if you do not keep up repayments on your mortgage.The information contained within this website is subject to the UK regulatory regime and is therefore primarily targeted at consumers based in the UK