If you live in Essex and are considering taking out a bridging loan our experienced consultants would be happy to explain how it all works and the costs involved.
Why do people take out bridging loans?
A bridging loan is commonly used by property developers to purchase an asset which is not suitable for conventional mortgages. We see bridging finance typically being used for the following purposes:
Buying at auction – If you are successful at a property auction you will normally have to complete within 28 days and to achieve this through a standard mortgage is unlikely.
Uninhabitable properties – Possibly the property is in poor condition and has no kitchen or bathroom making it unsuitable to traditional mortgage lending.
Change of use – If you plan to make major changes to the building for example convert offices into residential flats or change a property into a HMO (House of Multiple Occupation).
Chain break – Maybe your buyer has pulled out and you need to sell to be able to complete on the new purchase.
It is important that you have a clear goal of how you intend to pay off the bridging loan also known as the exit strategy. Common exit strategies include:
Sale of property – Once the refurbishment is complete maybe you intend to sell the property to pay off the finance.
Re-finance onto a buy to let mortgage – Maybe you want to build a property portfolio, so therefore you intend to raise a buy to let mortgage on the property to clear the bridging loan and have a long term investment.
How long can you have a bridging loan for?
If it is a regulated bridging loan (i.e. you intend to live in the property) the maximum term is 12 months. If the loan is unregulated (i.e. bought solely for business purposes) the max term is around 18 months. If you are looking at development loans these can be over a longer term of up to 3 years.
It is important you are confident that the bridging loan term is suitable as failure to repay the loan within the agreed term can result in additional costs.
What lenders provide bridging loans?
This type of finance is provided by specialist lenders who offer their products through brokers, such as The Money Hub. We have a large panel of lenders and each lender has their own criteria and appetite for certain developments, which is where the advisers experience is key in sourcing a suitable bridging loan in Essex for you.
How do I get advice regarding Bridging Loans in Essex?
Simply complete the above enquiry form and schedule an appointment or call the office. When arranging a bridging loan it is important that you seek advice from experienced advisers who can explore all your finance options and clearly detail the advantages and disadvantages of this type of finance.