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Category: Bridging Loans

buy to let
Apr
28

Buy to let changes from Aldermore – significant

The buy to let market has experienced the implementation of significant tax related changes. The changes have created  problems mostly for individual landlords. It has also reduced the introduction of new speculative landlords to the property market. Individuals are now discouraged from developing large property portfolios unless they form a limited company to enjoy the tax relief available.

Company landlords benefit from the buy to let changes

The market has been waiting for a change to provide additional relief to both developers and buy to let landlords. Aldermore the specialist buy to let financiers have responded to the need by introducing new, more flexible mortgage products. From the 23rd April company landlords have been able to access the company’s more flexible morgae products. These were previously only available to individual landlords.

The bank has reduced its early settlement fees. Furthermore it is now offering remortgage products that dont bring legal, product or valuation fees with them. This fee structure makes a difference that will offer an impact to all their clients. Additionally, there will now be reduced rates to mortgages for multi unit freehold properties and HMOs.

Competitive rates

Rates start at 4.38% for the HMO and multi unit freehold properties. This is for a two year fixed rate products and and 75% loan to value. They have also reduced term variable rates across the range of their products. Some rates start as low as 3.28%. Their new remortgage products also enjoy no product, valuation or legal fees either.

Aldermore are also rewarding their existing customers. Multi property mortgages with discounted rates are available for those that have been loyal customers. Clearly it pays to stay. New customers that submit a second or subsequent application or those seeking a remortgage will enjoy these products too. They have also made it easier for landlords that have only recently started trading. Only one years accounts will now be necessary for those that are self employed. a reduction in early repayment charges makes the offer even more attractive.

Aldermores Commercial Director of mortages – Charles McDowell says “The sector has experienced significant change recently. So we regularly review our products to ensure we continue to support a broad range of customers. No matter how big or small their portfolio is”

Technology changes improve accessibility

Their own research has indicated that 41% of landlords intend to increase their portfolio over the next year. Interestingly 15% of those that are not intending to expand, will still seek to remortgage some their properties. Aldermore clearly understand how making changes to their products not only supports the industry but their customer base too. Focusing not only on financial accessibility but on technology too, customers can access their mortgages from their mobile phones too.

From April the 23rd brokers have been able to access their portal, get a quote or submit a deision in principle from any device. This facilitates quicker decision making and access to the finance in a market where circumstances change really quickly.

 


Scottish property Development Finance
Feb
23

Scottish Property Development Finance Continues Unhampered

Brexit is the big word and will continue to be for the foreseeable future in terms of property investment. It doesn’t seem to matter what is being explored and discussed, when the Brexit word enters the conversation, eyebrows are raised.

It could be anything from Scottish property development finance to bridging loans in Scotland, because Scotland is part of the UK, the Brexit uncertainty cannot be avoided.

Despite enjoying a different legal system and buoyant property market, Scottish investors still watch quietly as the Brexit negotiations play out. Those who are in the know, however, have indicated that Scotland will weather the property development finance issues and come out the other side without being the worse for wear.

 

Optimistic About Scottish Property Development Finance

Optimists abound when it comes to property development and it’s worth looking at who the real optimists are. After all, can they all be wrong?

There are several visible changes that have taken place in Scottish property development and the money exchanging hands within this industry too. Despite the attention it has drawn, few have indicated that any of this is harmful.

Until recently, Scottish property development projects have attracted a significant proportion of investors from abroad. Overseas investors dominated the market during 2017 and continued to do so during 2018. The Brexit word certainly didn’t scare them off.

 

Changes in Corporate Tax Relief

There have been some concerns that since the chancellor has moved to scrap corporate tax relief for foreign property investors that interest would wane. The expected drop in Scottish property development and the related property development finance has not happened.

What is also happening is that UK investors are looking north once more. Probably because they expect to enjoy better returns on their investment and get more bang for their buck.

Miller Matheson, executive director of CBRE, has made his views clear. In Scotland, the market has developed a resilience in remaining buoyant despite the “cloud of political uncertainty” for years. This has meant that the concerns over Brexit have not made a material difference to the investment climate north of the border.

While director of the Scottish Property Federation, David Melhuish, pointed out that the wider issues on Brexit were “too clouded for a real picture”,  Mr Matheson points out that this is unlikely to make an impact of note on the market.

 

Property Development Finance – UK-Sourced

What is interesting, though, is that there is an upsurge in funding from within the UK. Effectively, money from within the UK is now entering the property development market in Scotland. This could be the crucial factor in growing the market when changes to tax benefits for overseas investors become a reality.

Scottish property development finance is beginning to originate from with the UK.  And it’s growing. This development is potentially going to become the bedrock on which future project funding is built.

The property development industry in Scotland has been heavily influenced by foreign investment. Consequently, many will see the changes as an opportunity for new UK investors. Property development finance is available through highly skilled professional brokers.

High street lenders and mainstream lenders are making funds available for this market. A good property broker will, however, be able to guide new Scottish property development investors. Alternative financing, if it is needed, can be sourced.

 

Finding the Best Broker

Belgravia Property Finance has extensive experience in sourcing excellent private finance deals, with specialists able to assist in Scottish property development finance and bridging loans. Always seek out an experienced and reputable broker such as those at Belgravia Property Finance.

When investing in property development, it is best to ask a niche specialist. For development property finance you can rest assured that the consultants and brokers at Belgravia will be able to guide you, especially to find the right bespoke arrangements for you.


Irish property development financing
Feb
16

Time Is Ripe For Irish Property Development Financing

There is so much going on in the Irish property world that it is quite difficult to know where to start. Barely two months into the year and the Irish property journals, blogs, and newspapers are all brimming with a positive outlook.

Irish property development financing is now a viable short and medium-term investment. That doesn’t mean that there are no problems in paradise, but overall, Irish property is doing well.

All the activity, growth projections and the Government announcements relating to infrastructure investment indicate that Ireland is the place to be at least for the next decade.

 

Faith in the Future

When the government puts forward its plans to make a substantial dent in the housing shortage, things begin to change. This is exactly what has happened in Ireland.

Towards the end of 2017, the Bank of Ireland announced that it would be providing €1bn for property development in the Republic. This kind of approach fuels the optimism in the market countrywide.

This is more than four times more than the €250 million that was made available in 2014. Definitely signifying a substantial shift in development confidence.

After the tracker mortgage debacle, the Bank of Ireland has continued to identify accounts that will enjoy redress. This means that 14,500 customers have now been identified as having been impacted by the problem since 2010.

And an additional 6,000 customers having been identified for redress. This shows that there is good faith in the property industry and the banks are working hard at said redress.

The bank has now adopted a policy where proper home building strategies will be encouraged and financed, rather than the land hoarding of the past which may have contributed to stagnation in the property development industry.

Property development financing has already included the financing of over 3,500 housing units and 1,500 student beds. They have clearly positioned themselves to grow this area of their portfolio.

 

Government Investment in Infrastructure

The Irish government has allocated a €116bn investment into future infrastructure including housing, health, and environment. This has been planned over the next two decades.

Private industry is therefore taking the cue for a surge in the market. With the knowledge that new infrastructure will be built by the government, private business is now prepared to get on the bandwagon.

 

Dublin – Roads Paved with Gold

Recent figures indicate that Dublin commercial rents are now as much as six times higher than they are elsewhere in the country. They are also rising and expected to reach an increase of between 5% and 6% during 2018. Prime industrial rents are expected to rise by as much as 7% across the capital.

During 2017, there was a record uptake of commercial property leasing, especially offices, indicating an increased demand. The domino effect that can be expected from this is a kneejerk reaction coming from industry to prevent a shortage and any related crisis this may precipitate.

The jury is still out on whether office space will continue to be scooped out or whether vacancies will increase. Property professionals don’t agree on the details. Quality office accommodation is expected to increase in demand even if overall occupation decreases.

 

What This Means For Irish Property Development Financing

The ongoing growth in the Irish property market has been fuelled by government investment. This is an indicator that development opportunities will abound over the next few years. It can be expected to continue almost certainly for the next decade.

Catapulted by the government’s commitment to invest, Irish property development financing is likely to become a catalyst for the privately funded market.

Access to investing in the Irish property development market does not need to be difficult. Sometimes, when gaining access as a UK investor, hurdles can be experienced. It doesn’t really have to be once the property development financing has been arranged.

This is usually sourced and managed by an experienced, resourceful, and reputable broker or financial advisor. Belgravia Property Finance has an excellent network of both investors and financiers who offer private finding. Whether you are looking for a mezzanine loan, Irish property development financing, or Irish bridging loans, Belgravia are the people to speak to.


Irish Property Development
Feb
09

Irish Property Development or Buy To Let in Ireland?

When deciding whether to invest in property in Ireland, whether you are a local or foreign investor, you will want to decide where you want to place your investment. Should it be in Irish property development or should it be in Irish buy-to-let opportunities?

Both are currently excellent opportunities so making the decision will depend on your approach to investment and what you want to get out of it. It will also depend on how long you want to be locked into the investment. Alternatively, perhaps you’d be interested in a blend of both approaches.

 

Irish Property Development

For most developers, the investment is a turnover project. Property developers will invest in a project to turn it over, make a profit, and then start with a new project investment. This makes property development projects a short-term, high-return investment for most.

Investing in Irish property development is no different. After the 2008 crash, property development became the pariah of Irish investments. Those that understand economic cycles, however, understood that with recovery the Irish property development market would return. And so it has.

 

Track Records Matter

Once bitten twice shy may be a common idiom used in daily language. Many use it when it comes to investment too. However, the Irish government demonstrated one of the most invigorating post-2008 recovery strategies.

When a government displays an economic strategy that brings life back to markets that few thought would recover then both short and long-term investments become a worthwhile risk.

You will hear words like bubble and cycle and all sorts of other terms that may strike the fear of God into you when researching Irish property development. Remember that this should happen regardless of where you may choose to speculate.

Irish property investments currently rest on the backbone of supportive policy from the Irish government. As recently as 2017, new tax breaks have been introduced that favour investors, including those that buy to let.

This is happening while the UK government is tightening the thumbscrews on landlords. It would be unsurprising if property investors and developers start to migrate across the channel, especially in the wake of Brexit.

 

Funding for Irish Property Development

As property developers grow their portfolios, they also tend to tackle bigger and better projects. There should always be a good capital return on completion of a project. These returns, however, slow profit growth when they are used exclusively to develop the next project.

Using the returns to fund the next project makes sense. The size of the next project can also be substantially increased when quality funding is sourced. Short-term funding such as mezzanine funding and bridging loans all make up part of the property development funding. This is the type of funding that turns projects over rapidly. Done correctly, this produces high yield returns.

 

Finding a Good Broker

You may think that you have scored a bonus when you find a funding source that can provide you with excellent bridging loans and, in some cases, mezzanine funding too.

However, an experienced consultant that can help cover all aspect of Irish property development finance will help to carry you through the ups and downs of the development project and what happens when cash flow gets tight.

Advisors and brokers such as Belgravia Property Finance can also help you to source invoice trading. There are also other quick business finance that the high street cannot offer. For a broad spectrum consultancy on all your needs throughout your development project, contact the specialists at Belgravia Property Finance for that extra personal and confidential consultation.


Property development loans in Dublin
Feb
02

Market Growth – Property Development Loans in Dublin


The devastation that the 2008 crash brought upon the Irish property development market is no secret. In fact, there were conversations about whether it would ever recover.

Of course, there are half glass full and glass half empty people. The dire impact on the Irish economy did, to some extent, feed the pessimism of the glass half empty folk. The availability of property development loans in Dublin are now emerging as new growth is stimulated in the recovery.

Irish Recovery from the 2008 Crash

The Irish government nevertheless displayed a spectacular courage and strategy to resolve the economic crisis of the time. In fact, the admirable recovery is often cited by economists worldwide about to do something right.

The one very evident consequence was the stagnation of property development in the immediate aftermath of the 2008 crash. This lead, in subsequent years, to a high demand for property simply to accommodate population growth and movement.

Together with the progressive recovery, the Irish government empowered the property development loan as a phoenix rising from the ashes. Although there are slight fluctuations in growth, the Irish property market remains promising. Property development has again become a favourable investment.

UK Political Activity

It could be argued that political activity across the Irish Sea, such as the UK referendum on Brexit, has influenced this growth even further. Together with Ireland’s apparent political stability, the capacity of her government to lift the country out of economic crisis and ongoing growth, Ireland is becoming a favourite investment location once again. The demand for property development loans has resurfaced in the Irish Republic.

Demand for Property Development Loans in Dublin

Mainstream banks continue to have stringent criteria that will sometimes exclude property developers that need more flexible lending. Irish property developers continue to look for funding outside the high street and private funding has become available again.

Funding for commercial and residential property development loans in Dublin is reaching new levels in terms of demand. This could be because the proximity to the UK makes Ireland an attractive investment without all the speculation surrounding the Brexit process.

Ireland desperately needs an increase in available property. As developments increase, the demand for property will grow, fuelling the development market. There are those that argue that the uncertainty in the UK will have a negative impact on Ireland. Thus far it seems that the opposite effect has taken place.

Property Demand and Price Increases

Ireland needs more homes than it has available. There is substantial government sourced funding available for social housing. There is also a clear demand for private investment in property development loans.

The rise in house prices is indicative of this growth and the expected continued growth over the forthcoming years. If anything, Ireland is set to boom. Those looking for a way around the UK departure from Europe will look to their closest neighbour for resources and business growth.

Get a Good Broker

Experienced brokers are once again able to source some of the best Irish Property development loans in Dublin for investors seeking to develop and make a sound profit on property development. It’s a win-win situation for both the borrowers and the lenders. Even while mainstream banks are avoiding being drawn into the demand.

Belgravia Property Finance can source funding for developers and refer excellent development prospects to private financiers. With exceptional experience and a sterling reputation, they are a really good choice for advice and support.


Jan
29

Auction Finance – Solutions For Quick Property Purchase

Property developers attend auctions to weed out some of the best investment opportunities available. Auctions, however, present a multitude of complexities that do not come with mainstream property purchases.

Financing an auction property can bring with it headaches and technical problems not seen in traditional property purchase scenarios. Auction finance is specifically geared to deal with these issues.

 

Auction Finance – What’s the Difference?

Most commonly, auction finance is a form of bridging finance. It allows the property purchaser some breathing space to get more traditional forms of finance in place.

In some cases, the finance must be completed quickly to secure the auction sale. The loans are usually secured against the property that has been purchased or other property that the developer already owns. The idea is to make the funding available as quickly as possible to allow completion.

Funding can be confirmed within hours. This is in complete contrast to the days or weeks that financing can take in traditional situations. The process is less onerous, and lenders will be more interested in the security available.

Auction finance sources will also lend to individuals who are self-employed as well as limited liability partnerships, limited companies, partnerships, sole traders, and employed individuals. Their scope for consideration is far wider than the average high street bank.

 

Not Just A Bridging Loan

Auction finance does not always involve bridging loans, however. When an investor or property developer sees a property they would like to purchase at auction, they can prepare financing ahead of time.

Mortgages and buy-to-let mortgages can be agreed in principle well before the hammer falls. This places the bidder in a position where they will know where their funding limits lie. Situations where the bidder knows their maximum bidding threshold places them in a position of strength.

Auction sales move very quickly. Especially for those new to them, it can be nerve-wracking and overwhelming. When the hammer drops, 10 percent of the price has to be paid up front.

Under most circumstances, the balances will be settled within 28 days. It is usually the 28 day period that necessitates auction finance in the form of a bridging loan.

If a mortgage has been agreed in principle and where it is being secured on either the purchased property or other assets, it is on rare occasions possible to finance immediately using a mortgage agreement.

To achieve this, you may need an experienced advisor broker. Your broker will know which finance companies work the fastest to ensure completion on time while still meeting all the requisite legal requirements.

 

Commercial Property

Auction finance is not only available for residential property. A business may want to extend its premises or buy new premises at a different location. If it is expanding, there may be good reason to buy additional properties.

Commercial property financing is also available under auction finance and is a good avenue to purchase value for money property. In the same way that individuals may want to seek a mortgage, it is probable that a commercial purchase at auction will require both bridging finance and a commercial mortgage to obtain the property.

If you are an individual seeking to buy a second home or a business purchaser for new manufacturing premises, good financing advice will be crucial. Established and reputable brokers will be well networked and able to find you a good deal.

Whether you wish to use a traditional lender or will need to find a private lender, Belgravia Property will be able to guide you along the way. For confidential unbiased advice, contact our London office.


Jan
15

Second Charge Bridging – Are The Lenders Disappearing?

Whether you are based in Cardiff, Birmingham, Glasgow, or Dublin, there will be property that needs to be financed outside of the conventional norms.

This can be because there is high pressure to close the deal. With competitors lurking like vultures ready to snap the opportunity from you, you may want to act quickly and decisively. Second charge bridging is often the route to take.

Frequently, there is something that is holding up the process. Individual home buyers could be waiting for the settlement of their current home sale. It’s even possible that their current property has not yet been sold. A second charge bridging loan is needed. And urgently.

 

Second Charge Bridging

Second charge bridging loans are a little different from regular bridging loans in that they cover the balance required for borrowing when there is already a current mortgage in place.

This kind of bridging, however, only takes place when there is sufficient equity in a property to support the lending. Finding a lender to provide finance for this kind of situation is not as simple as walking into a high street bank.

Most lenders that will offer second charge bridging will be non-status lenders and will take less interest in your credit history and details of income. They will, however, take a far greater interest in the property itself. The worry is that as Brexit approaches are these lending sources going to dry up?

 

Are Bridging Lenders Drying Up?

Most bridging lenders borrow from wholesale banks and then pass the tight terms on to their customers. The very nature of bridging loans means that the margins are cut very thin.

For the lenders, this kind of lending can become difficult as economic seas become rough. To catch up on the current housing shortage, the UK needs to build 250 000 new homes every year. In 2015, only 143 000 were built.

The four wholesale banks that provide the finance for second charge bridging lenders have been reviewing their position and winding back on this type of lending.

Rather than cause a shrinkage in the market for second charge bridging, it appears they may, in fact, have created a void that other non-conventional investors are willing to fill.

As Brexit draws closer, the property market may be flatlining in some areas. It, however, hasn’t fallen through the floor as some pessimistic forecasters suggested it would.

The availability of bridging loans remains a feature in the property market. It, in fact, may well be the financial product that keeps the market going. This bodes well while we negotiate our way through the economic uncertainty that many feel over Brexit.

 

Economic History Suggests Differently

In fact, the demand for bringing loans has increased since the Brexit vote. This may well be an indication that investors have faith that the market will grow again steadily once the dust has settled.

When we look back at the financial crisis of 2007 and 2008, retail mortgage deals dried up rather quickly. This left the market ripe for second charge bridging lenders to take the opportunity to keep the property market afloat.

When things became more difficult economically, it would seem that bridging lenders flourished. Bridging lenders do, however, need to assess their customers’ situation. This is to ensure they will not get into financial difficulty during the duration of the loan. Typically, a period of between one month and one year.

The economic circumstances that demand the necessity for bridging loans create unexpected byproducts, however. Terms that were unacceptable yesterday will become completely acceptable today, just to get the loan.

To explore the best possible terms for second charge bridging, you will need a reputable and experienced broker. Although based in London, Belgravia Property Finance provide advice and support for properties throughout the UK, including Scotland and Northern Ireland.


Aug
22

Bridging Loans In Scotland

Because property law is somewhat different to elsewhere in the UK, it can be difficult to obtain bridging loans in Scotland. This is the case, especially when approaching a traditional high street lender.

Bridging loans in Scotland by their nature are not a long-term solution. They are exactly as their name describes them – a short-term bridge to cover a shortfall when the mainstream funding for a transaction is not available for any of several reasons.

Typically, they are sought and offered to stem a cash flow issue that has arisen once a transaction has commenced. The transaction cannot be concluded because of an obstructive situation. Quite literally, they provide emergency funding while the clock is ticking.

That said, there are some, mostly private, lenders that provide access to bridging loans.

 

Bridging Loan Rates In Scotland

Bridging rates for loans secured against Scottish property have dropped significantly over recent years. This is due to an influx of lenders in the sector now lending in Scotland. Rates are available from 0.48% per month for regular bridging loans in Scotland and much lower from private banks, for high net worth individuals (HNWI) that qualify. Loan to values are generally up to 75% of value.

Scotland is also known for Below Market Value (BMV) bridging transactions, Belgravia Property Finance has successfully arranged 100% funding towards below market value purchases in Scotland. An example of a BMV deal is the client purchases a property on the open market value, the property has already had a valuation carried out (Home Report in Scotland), this values the property at £100,000, the property is marketed at this level but doesn’t sell, but the client negotiates a price of £70,000, this is now a below market value transaction.

Belgravia Property Finance can arrange a loan for the full purchase price, plus fees up to 75% of the value ie. a maximum loan of £75,000 in this case. Belgravia can then arrange exit finance via a mortgage. Rates for 100% loans which are below market value are higher than standard bridging rates due to the higher risk taken by the lender.

 

The Loans Are Unique

What makes a bridging loan unique is that it is a flexible product that is usually structured on bespoke terms that are unique to the specific lender, borrower, and circumstance under which the loan is being taken.

The loan will also be an interest-only loan because it is simply to cover other funding which, once available, will be repaid on the terms set by a different lender.

Bridging loans in Scotland are designed to provide access to funding secured against property, therefore, they can also be structured in different ways to include the security. Funding can be procured on either first or second charges or both. It is even possible to structure a loan across multiple properties.

Furthermore, any type of property can be considered for a loan and almost any borrower circumstance will be considered by the lender.

 

Newcomers To The Market

The financial crash that caused the credit crunch worked as a catalyst to bring about new innovative bridging products. Moreso, and especially in Scotland, new entrants to the market have forced change and a rethink of how the bridging loan market in Scotland is developing. Lower interest rates have also been seen in more recent years.

There are still far fewer lenders that will provide bridging loans in Scotland, compared to England, but the lending scene has improved substantially. Belgravia Property Finance has access to bridging loans that are unique and can connect you with different opportunities in private funding. There are even funders that will cover bridging loans in Scotland as well as England, Wales, the Channel Islands, and much of Europe.

Differences in Scottish property law have made it difficult for bridging lenders to provide loans across the UK. The few that do are specialists and are often accessible only through a specialist advisor.

 

What Are Bridging Loans In Scotland For?

Bridging loans are typically provided for:

  • Scottish commercial properties
  • Landlords that are building property portfolios both in England and in Scotland.

Applications for a bridging loan in Scotland will not follow the same procedure as applying for a high street mortgage. Using an expert broker means that you will find that the confidentiality and sensitivity are increased.

The level of professional conduct provided and expected is also much higher. Applications are processed quickly because bridging situations often accompany a sense of urgency. There are situations that without a rapid solution, transactions may in fact collapse. Something we would seek to avoid for our clients at all costs.

The typical bridging loan covers around 70% of the value of the property against which it has been secured. There are unusual situations, however, when the loan will cover 100% of the value of the property. This is the one similarity that can be seen with high street lenders.

Deals can take as little as a few days to finalise. They can, however, be expected to take between seven and fourteen days.

 

How Bridging Loans Work

Most bridging loans come in one of two forms.

Firstly, there is the closed bridging loan. This kind of loan is aimed at borrowers that have already completed an exchange on the sale of a property. They do, however, need the finance to secure the transaction. This type of bridging loan is easier to find and negotiate because risk to the lender will be reduced.

In the second instance, the bridging loan is known as an open bridging loan. These are provided in situations where a borrower has found a property that they wish to purchase. Their problem is that they have not yet sold their own property.

Increased risk of the first home not selling means most lenders are reluctant to offer bridging loans when this happens. The probability of acceptance for an open bridging loan increases with the more equity the borrower holds in their property.

Learn more about bridging loans in Ireland and Spain.


Jul
25

Everything You Ever Wanted To Know About Bridging Loans

Bridging loans are designed to be a short-term solution covering situations where a debt is due but the credit to cover it has not yet become available or a permanent solution for property developers and investors to fund their short-term development projects.

A bridging loan will fill this gap and allow a transaction to progress to completion, preventing the potential collapse of the sale. Belgravia Property Finance source rates from 0.44% per month.

 

Who Needs A Bridging Loan?

Bridging loans have traditionally been available to property buyers in all sorts of circumstances, including individuals needing to pay for a new home before their current home has been sold.

It is now far more common for bridging loan products to be aimed at the asset rich property buyer, property developers, and landlords that want a simple, straightforward, and quick solution as they turn their properties over.

 

A New Breed Of Lender

Following the credit crunch of 2008, banks have been reluctant to provide these kinds of loans to customers across the spectrum and, as a consequence, a new generation of specialist bridging loan providers have emerged.

These specialists also target clients that are buying at auction of fast turnover developers that buy properties to improve them and then sell them again a few months later.

 

The Cost Effect

The core reason why bridging loans are not ideal for everyone is that they are high-interest loans which can cost from 0.44 – 1.5% per month. Additionally, there are also likely to be some rather heavy administration fees added to that too.

While bridging loans are quite commonly looked at as a funding instrument for buy-to-let and other property instruments, they have also become more common for the personal homebuyer because banks and building societies on the high street are simply taking much longer to make lending decisions when the home loans are larger than average.

 

Beware Of Precarious Lending

For some, this may seem to be an attractive alternative when they struggle to obtain mainstream finance. However, for obvious reasons, this kind of expensive loan is not the ideal solution over a 20-year plan.

In fact, it is also possible that those that take a bridging loan while negotiating a high street mortgage can find themselves trapped in a very expensive loan situation if the effort to find suitable high street funding fails for any reason.

If things go wrong you could find yourself having to sell the property and it is important to have an exit strategy when taking the loan out in the first place.

These situations make it clear why bridging is ideal for developers and buy-to-let landlords, but only in very specific circumstances for individual property buyers. Concerns have been voiced that some lenders are far too quick to offer this type of loan to inexperienced and vulnerable customers.

 

Ask An Expert

It really is important to obtain experienced expert and professional advice when considering this route, whether it is to truly close a gap between finding solutions or turn a property over quickly as a developer or property investor. Even the experienced property developer can sometimes make a mistake.

The idea of consulting with an expert lies not only in the fact that the expert will be able to help you find the best deal suitable for your specific situation, but they will cover several other options that you will need to consider such as your exit strategy and what contingencies you should consider should anything go unexpectedly awry.

 

Where To Look

It’s always best to use an FCA regulated broker such as Belgravia Property Finance because bridging lenders come in all shapes and sizes and it really is possible for the uninitiated in the world to end up with an unregulated unscrupulous lender.

By using a recognised broker, you will have a professional that must comply with professional standards that have an impact on his or her business.

Rather than hunting through the back pages of a newspaper or in the dark corners of the internet, you may be surprised to find that your broker can recommend a good specialist lender.

Of course, the sign of a good broker is certainly one who will tell you when this type of finance is not suitable for you, whether you are in the loan market for personal or business reasons.


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