With a population of over 1.8m and also being known as the garden of England, Kent is a popular place for people to live. With high demand for property, developers seek opportunities where they can purchase properties, renovate, add value and sell or let out long term. Many properties are not suitable for traditional finance which is where bridging loans can help.
What is a bridging loan?
This is specialist finance mainly used by property developers. It provides short term finance where traditional lending such as mortgages are not available. These are the most common reasons why bridging finance is taken out:
Buying at Auction – When buying at an auction you normally have to complete within 28 days and for a standard mortgage this is generally not achievable.
Bridging loans are quick and can complete within 7 to 14 days.
Uninhabitable Properties – If the property has no bathroom, kitchen or is in very poor condition and you would be unable to live in the property straight away, these properties are classed as uninhabitable and standard mortgages will not lend upon these. Bridging finance is more accommodating and will finance these property purchases.
Property Development – If you want to buy a commercial unit and convert it into flats or take a standard house and convert it into a HMO (House of Multiple Occupation) bridging loans can help.
Chain Break – If you want to buy a property, but your sale has fallen through, a bridging loan can help bridge the gap in funding to allow you to complete on the purchase and you can repay the loan when you finally sell your property.
All bridging loans are tailored to the project and the terms issued are on a case-by-case basis.
What are the Advantages of a Bridging Loan?
Speed – If you need to complete quickly so you don’t miss out on an opportunity, this where bridging loans can really help.
Flexibility – bridging loans are bespoke to the project. The lender will consider each transaction on its own merits.
Loan Size – The size of finance offered by bridging loans can range from £50,000 to £25,000,000.
What are the Disadvantages of a Bridging Loan?
Term – If the loan is being used to finance a property which you intend to live in the maximum term is 12 months. If the finance is for a non-regulated transaction (i.e. you will not/have not lived there) then the maximum term is 18 months. Development loans are available up to 2 years.
Cost – There are many fees payable such as a valuation fee, lender fee, solicitor fees plus monthly interest you will be charged. The terms issued by your lender will outline all costs payable.
How to arrange a bridging loan in Kent?
You can either call the office or complete the enquiry form and schedule an appointment with an adviser. When speaking to one of our consultants we will:
Discuss the overall project and feasibility.
Talk about your experience.
Outline all costs payable and when they are due.
Provide you with terms within 24 hours to consider.
It is extremely important that with bridging loans you speak to an experienced consultant who can clearly outline all the points raised above and guide you through the process.