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Bridging Finance For Property Development

A bridging loan is a fast and flexible form of funding for property development. It provides you with access to the finances you need when you need it, preventing hold ups and enabling your project to proceed smoothly.

Learn more below or get in touch today to discuss and compare bridging loans for property development.

Bridging loans for property development should not be mistaken for development finance, which is subject to different lending criteria and is released in staged payments throughout development projects. We’ll talk you through your available finance options to help you decide the best loan to take for your individual project.

How does a property development bridging loan work?

As their name implies, bridging loans are used to ‘bridge’ a gap between an incoming debt and funds becoming available to the borrower, either from selling an asset or securing a longer term loan. In the case of bridging loans for property development, this gap is between funding your development project and either selling the property when it’s finished or getting a mortgage to pay it off.

Bridging loans differ to mortgages in that they are a short term form of finance. The average repayment time is 12 months but this may be shorter or longer depending on specific circumstances. Interest rates are comparatively higher than mortgages too, though your exact rate will be dependent on the individual case and the strength of the exit strategy. In order to access the bridging loan with the best terms for your circumstances, enquire now to speak to a broker who can help you compare your options.

There are a number of different ways in which you can use bridging finance for property development, whether your investment is for commercial or residential purposes. It may be that you already reside in the property and you are looking to renovate to sell, or you’re a developer considering an investment opportunity at auction and need access to finances fast to go through with the purchase. To learn more about the different ways that bridging loans can be used for property development read our in-depth post on it here.

Exit Strategies

Lenders assess bridging loans on the strength of the exit strategy, which is your plan for how you intend to repay the loan at the end of your term. This is key to being accepted, since lenders will want to be confident that you’ll have the necessary funds to repay what you owe, plus interest.

A clean credit history can also help, however as long as you have a strong exit strategy, bad credit bridging loans are very achievable too. If your credit history is less than perfect and you want to know more about bridging finance for property development, please get in touch as it’s always best to contact a broker first. There are several specialist lenders who specialise in bad credit loans, but these are typically only available via a broker due to the complex nature of the application process. Whatever your specific circumstances, we’ll tailor our advice to you and match you with a product and a lender that suits your needs.

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Bridging Loans For Property Development FAQs

Bridging Loans for Property Development are available from a variety of lenders and range from around £25,000 to £25,000,000. Contact Us Today to discuss all Your Mortgage Options

Bridging Loans for Property Development can sometimes be processed very quickly, in timeframes commonly ranging from as soon as the same day to a few weeks.

Yes, you may well be able to access Bridging Loan finance for property development with less than perfect credit. The lenders look for a solid exit strategy and your plans of how you are going to repay the loan within its term. Get in touch to speak to one of our experts today and we can help you with all you’ll need to know.

Bridging loans have a relatively high rate of interest and is a larger loan over a shorter term, ideal for “bridging the gap” for the short term. Whereas a mortgage is a low interest form of financing a home taken over a time frame of up to 30 years, so much better suited to longer terms.

Involving an independent mortgage advisor to discuss bridging loans for property development earlier on in the application process gives us more opportunity to help you and reduces the stress and disappointment of not being able to secure the finance that is specifically suited to your needs.

Commonly between 6 and 24 months, although really the right answer is “it depends.” Because we have access to the whole of the market and are totally independent, there are many different terms available from myriad lenders. Our job is to ensure that you find the right Bridging Loan for Property Development and place you with the right lender that’s best suited to your specific circumstances.

Bridging Loans for Property Development are typically non-status loans. This is because bridging loans are secured against the property which you can fall back on if you’re unable to repay the amount when it becomes due.

Commonly across the board, lenders have arrangement fees of around 2% of the total cost of the loan. You don’t have to pay these in advance as they are typically deducted from the total amount that you are borrowing. So if you were to arrange a £100,000 bridging loan for property development then you would receive £98,000 as an advancement. To learn more, get in touch with our team today.

It’s standard practice when assessing bridging loan finance for property development that the lender will instruct a property surveyor to carry out an independent valuation of the property, and commonly the fee for this must be covered by the borrower. This ensures that the property is worth enough to provide the security it needs to raise the bridging loan for property development and it also that the valuation of the property is accurate and realistic.

Yes. Legal fees will also need to be factored into the total cost of your Bridging Loan for Property Development both on the lender’s legal fees and your own solicitors’ also.

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