BRIDGING FINANCE
1st Choice Finance can help arrange bridging finance up to 25 million, with a diverse choice of products for property developers to help ensure that the best rates are achieved.
A bridging loan is used as a short term option, usually up to 24 months and is secured against either land or physical property. These loans can be arranged quite quickly, and we are usually able to get a deal finalized within a few days. Finance can be secured against single or multiple properties if required.
Under normal circumstances bridging loans will cover 75% LTV with no early repayment charges. A bridging loan is designed as a flexible product in terms of repayment schedule, interest only payable at maturity, and can include no upfront fees.
When to Use Bridging Finance
Property Renovations – Borrowing with high street lenders for property refurbishments can sometimes be a slow process, and lenders can be quite averse to lending for this purpose. A bridging loan can a good solution to this, and some lenders provide up to 65-70% LTV and in addition to this will fund refurbishment costs.
Access to Borrowing – If you want to get access to capital quickly, bridging finance can work well. We will always endeavor to work intensively with both borrower and lender to ensure that the loan is completed as to an agreed timeframe.
Property Chain Issues – When there is a break in a property purchase chain, using a bridging loan the borrower will be able to still secure a loan for a new property whilst waiting for a sale of an existing property.
Unobtainable Mortgages – There are many reasons why traditional lenders will not provide mortgages on a property. In these circumstances however, some lenders will provide bridging loans of up to 75% LTV. This also applies to short term leases whereby a borrower can borrow to extend a lease and then obtain finance via the traditional lending route.
Auction Finance – Where an outstanding balance on a property purchased at auction is required to be paid by a certain date, bridging loans can be used to fund the payment of this balance, which will usually be within 28 days of purchase.
Planning Permission – Bridging loans can be used to access short term finance against their land or property. This can enable the land or property to be sold at a higher value, and then the borrower will repay the loan.
Clearly Defined Exit Strategy
Before being accepted for a bridging loan, the borrower will need to show there is a clear exit strategy in place to enable to loan to be repaid in the agreed time. This might be selling land or property or refinancing with another lender. The lender will need to see proof of the exit strategy for each different purpose the loan is taken for. Whether this is proof of funds for property development, or that a property is being marketed in the case of a broken property chain for example.
It should be noted that generally bridging loans offer borrowers a lot more flexibility than traditional lending routes and lenders will consider:
- Property Refurbishments
- No Income eligibility
- Credit History Issues
- Refinancing of Bridging finance already in place
To find out more speak to the team at 1st Choice Finance today on 0208 000 000.