“Would you like to have access to the most competitive terms for Bridging and Development Finance with rates starting at 0.37% and flexible terms for Bridging up to 80% LTV? With over 50 years in financial services we have the knowledge and the skills to help you achieve your goals. We will source terms for you as quickly as possible, and we are used to working within a tight time frame, in conjunction with you, the lender and the Solicitors to achieve completion of the project on time.”
Bridging and Development Finance
Bridging or short term finance is the most flexible and quickest way to raise funds from £100,000 up to £100m (Up to 80% LTV) as it is a pure asset secured facility and does not require you to service the debt during the term of the loan, only to provide a viable exit plan. The funds can be used for you to achieve a number of goals:
Bridging Finance, Purchase of Land, Development Finance, Portfolio Investment, Buying at Auction, Buying Below Market Value, Where speed is the issue to Complete, Chain Breaker, Release Capital, Pay Off Short Term Debts, Improve Cash Flow, Bad Credit Profile, Purchase or Remortgage of Residential or Commercial Property.
Development Finance Facilities
Our development finance will cover the following areas
- Residential Development
- Commercial Development
- Conversions and Refurbished property
- Property where planning has had a positive gain
- Mixed use Development
- Experienced and first time Developers
- Change of use
We will consider projects from £100,000 – with no real upper limit, and we would normally lend up to 65% of GDV (this level can be exceeded in certain cases). The facility can provide 100% of construction costs, professional fees and a contribution to the purchase of the site. The ceiling would normally be 90% loan to cost. A good understanding of the type of development the sector and the geographical area is essential.
A good proven track record in the chosen sector would give any lender the confidence to issue terms, but we can consider first time developers with the right backing of experience in the team.
Fees associated with any facility, and the interest rate, will vary from case to case based on the loan to value, the perceived risk and the term of the loan,
We endeavour to place every enquiry on the most competitive terms, and will report back to you with indicative terms as quickly as possible. Our level of service is something that we are proud of and we want to work with you to complete the project on time and within budget.
Short Term Finance
Bridging or short term finance has changed so much from the ugly duckling to the beautiful bird of paradise, who can always put a smile on your face, and never ceases to surprise us with its flexibility and for breaking new ground. Where this market would be without the short term lenders I hate to think, they have not only filled the massive gap left by the high street lenders they have taken the market by storm seemingly with the motto anything is possible. If we have the valuation and the exit route, we will consider it.
One of the more entrepreneurial lenders are now lending up to 100% of the purchase price, up to 70% of the LTV on BTL, Commercial and refurb investments, music to any developers ears.
This is a massive market with numerous properties being sold way BMV, giving any smart developer room for manoeuvre, and with the residential market picking up, an exit route can be found whether by sale or re-mortgage onto a BTL product.
The more positive mood in the residential market came as a very pleasant surprise, after five years of doom and gloom, lenders are starting open the lending door very slightly, and first time buyers are desperate to get on the ladder and driving the market, and for once not just in London, the ripples are just starting to move across the property pond.
Bridging and Development Finance Q&A
Q1.What is a bridging loan?
Answer: A bridging loan is a form of short term funding, secured on residential or commercial property, on an interest only basis. The interest is rolled up into the facility, including the majority of the fees, for a period not normally exceeding two years.
Q2.Can a bridging loan be arranged quickly?
Answer: A big YES. We would expect to produce indicative terms on the same day. Completion is then possible as soon as all the supporting paperwork has been received by the lender, including the valuation, and funds can be released within 48 hours.
Q3. Over what term can a bridging loan be taken out for?
Answer: A bridging loan can currently be arranged from no minimum term, to a maximum term of three years.
Q4. What is the maximum loan to value (ltv) that I can borrow on a bridge?
Answer: With a normal bridging facility the maximum ltv would be 80%. On development finance this would not exceed 70% of Gross Development Value (GDV) except in exceptional circumstances.
Q5. Can I buy below market value?
Answer: If you are purchasing below market value it may be possible to borrow up to 100% of the purchase price.
Q6. If I need to borrow more than the 80 % LTV can I offer another property as security on a first or second charge basis?
Answer: Yes, most lenders would agree to this, providing the funds were being used to renovate or purchase the property.
Q7. Can the loan be repaid before the end of the term?
Answer: Yes the loan can be repaid early without penalty and any unused interest is returned to the borrower.
Q8. What can a bridging loan be used for?
Answer: A bridging loan can be used for the purchase or refurbishment of a property, whether commercial or residential, to provide short term working capital or an auction purchase, a chain breaker or repaying tax bills, including VAT
Q9. Are there any up-front fees?
Answer: There are no up-front fees to pay upon application but you would normally be expected to pay the valuation and legal fees prior to completion.
Q10. What is the most important part of the lending policy for granting a bridging loan?
Answer: All lenders, without exception, need to feel comfortable that you have a viable exit plan in place. This can be something like a remortgage or sale of the property, or from funds that you are expecting from inheritance or another source. Lenders just need to see evidence of how you intend to repay the loan.
Q11. If I have an adverse credit profile will lenders refuse my application?
Answer: Some lenders will say no, but there are other lenders who will take a view if they are comfortable with the exit plan, however any adverse credit may have an impact on the terms of the loan.
Bridging Finance is an asset based loan secured on land or bricks and mortar, and has a fixed term from one day, to a current maximum period of three years, with a normal maximum loan to value ceiling of 80%, without additional security. The debt does not have to be serviced during the agreed term, as the interest and fees are rolled up within the facility, making it very cash flow friendly. What all lenders require is a viable exit plan, in order that they can be assured the debt will be repaid within the agreed timeframe. Bridging Finance is quick to agree and can be completed very quickly, with the minimum of paperwork.
Purchase of Land
Bridging can be a life saver when trying to purchase land that is awaiting planning, and can then be sold on for development, or where the high street bank is taking their time making a decision, and a bridge will keep the deal alive. Also buying land at auction where speed is of the essence, bridging again comes to our rescue with the minimum of fuss.
Buying Below Market Value
Just how much do developers and Buy To Let Investors love this product when buying property below market value, as Bridging is a pure bricks and mortar loan, we are lending against the value of the property, not the purchase price. If the property is being purchased at way below market value it may be possible to borrow 100% of the purchase price, renovate the property and then re-mortgage onto a normal mortgage product, or sell on and take the profit. You have to get your sums right and the timing is critical, but you can make the value of the property work in your favour and put in far less cash than you would normally expect to.
More About Bridging Loans
What are the main attractions of Short term Finance?
Proof of Income ?
1 You do not have to prove income to service the debt during the period of the facility. All of the interest and charges are rolled up within the loan, leaving you free to concentrate on your business.
Period of the Loan.
2 The period of the loan can be anything from from One day, to in some cases Three years, with no exit penalty and any unused interest being refunded on an early completion.
3 Bridging can be used as a chain-breaker, where clients need to exchange contracts now on their purchase, but have a delayed completion on their sale
4 Buying property at Auction puts pressure on the client from day one with the time frame, whereby clients are expected to exchange contracts 28 days after the deposit is paid on the day of the auction. With Short term finance this is not a problem, and we now also have a new Bridge To Let product that maybe of interest to clients looking to expand on their Buy to Let portfolio.
5 Property Developments.
This is an area where short term finance really shines, and demonstrates just how flexible and adaptable to changing circumstances it can be. The facility can be built around the clients needs with the ceiling on most developments being 70% of GDV, ( Gross Development Valuation ) . With this in mind, how the funds are to be drawn down and at what stages are agreed from outset. Clients are then charged interest only on draw down, with a planned exit route of a sale or refinance of the property. Timing is critical to avoid going outside an agreed time Frame and incurring penalties.
6 Cash Flow
This may not be an obvious area to all clients, but many have found quick and easy access to funds to enable them satisfy some unexpected pressure from their bank on the agreed overdraft, pay off a Tax demand, clear unsecured debts, improve the current level of cash flow.
7 Release Capital
The high street banks at this moment are not exactly opening the doors to new lending and are very risk averse. Some businesses are missing out on the opportunity to buy at the right price, or to expand when the opportunity arises. Short Term Finance may have the key to the bank vault
8 Bad Credit Profile
Having a Bad Credit Profile may preclude you from arranging a mortgage with lenders who base their decision to lend on Credit Scoring, but with Short Term Finance, the exit route is the requirement that is set in stone. If we can satisfy the lender that we are in control of this, your credit profile is not the issue that it would be with most lenders.
All clients should be aware that Short Term Finance is a bricks and mortar mortgage secured facility, normally on a first charge basis, with no requirement to prove that the debt can be serviced from income. What ALL lenders require without exception is a viable and acceptable exit route from the facility at the end or before the end of the agreed term of the facility.
The Financial Conduct Authority does not regulate bridging finance unless it is secured on your principle residence.
For what purpose can I use Bridging Finance
Property Development Finance will provide you with short term funding to enable you to purchase residential and commercial property, land purchase, and to consider new builds and conversions
We offer residential bridging on all types of residential property, the property can be an investment property, or one that you own or intend to purchase. We have funding lines to help both for investment and where you live or intend to live
This product is normally used when an investment property cannot be mortgaged because it would not meet the lenders criteria and cannot be let in its current condition. Once the property has been refurbished it should be possible to remortgage onto a BTL product to take out the loan.
A bridging facility can be arranged to release cash to repay short term debts or pay tax or vat
Regulated Bridging Finance
Most of bridging finance is unregulated, but where you have lived, intend to live, or are living makes the facility a regulated product. We can help you with regulated loans which are normally chain breakers, or where the property needs work to make it habitable and would then attract a normal mortgage product
This product has become very popular and widely used by property developers buying at auction where the purchaser has in nearly all cases 28 days after the offer has been accepted and a 10% deposit has been paid, to exchange contracts. Bridging finance can be arranged very quickly and drawn down on within the 28 day period.
This product has become a very welcome new one to the market where clients may overrun their existing facility and would suffer in most cases very severe penalties by not completing on an agreed date, this product enables the client to get the project completed.
This product can be used to purchase or refurbish any commercial property, offices, shops warehouses, or even to solve a cash flow problem or the acquisition of stock or equipment
Funds can be made available to purchase land with or without planning.
Second Charge Bridging
This facility is available and can be used providing the lender with the first charge agrees to the second charge