Bridging Loans Surrey

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Bridging Loans Surrey

The cost of properties in Surrey can be expensive, however there are opportunities to property developers.

If you are looking to buy a property that is classed as uninhabitable or you want to develop a property and convert a house or office it into flats for example, a Bridging Loan is a way to finance these projects.


Why do people need a bridging loan?

While there are many reasons people take out a bridging loan, property developers are often the most likely borrowers. When these businesses or professionals want to secure an asset, and a conventional mortgage or Secured Loan isn’t applicable, a bridging loan can help. Many property professionals in Surrey would be aware of bridging finance.

However, some of the other common reasons for arranging a bridging loan include:

  • Property buyers at an auction have 28 days to conclude the purchase, and a standard mortgage isn’t applicable, so a bridging loan is of assistance.
  • When property isn’t habitable, mortgage lenders will not provide finance, but a bridging loan allows the buyer to purchase the home and make suitable upgrades.
  • Often, when a property undergoes a “change of use”, such as being converted from business premises into residential flats (Converting Commercial to Residential), a standard mortgage isn’t applicable, but bridging finance is.
  • Bridging loans have also been used to resolve breaks in property chains or other temporary matters when concluding a property transaction.

You should be aware that bridging finance can be expensive, especially for property in Surrey.

When you arrange a bridging loan, you should be clear on how you expect to pay off the loan. Some options include selling off the property for profit or refinancing on a Buy to Let Mortgage, Commercial Mortgage or HMO Mortgage.


How long do bridging loans last for?

How long a bridging loan lasts for usually depends on the intent behind the loan.

When the applicant intends to live in the property, a regulated bridging loan is required, and this should be paid off in 12 months.

When the loan is for business purposes, there is a need for an unregulated loan, which can be paid off in 18 months.

When there is a property development loan, the length of time for repayment is up to three years. Mezzanine Finance is also an option to help developers fund a property development.


What are the costs with a bridging loan?

There are costs associated with bridging loans. Many lenders will charge an arrangement fee, which can cost up to 1% or 2% of the total loan. If you are buying a property in Surrey, this fee can be substantial. Additionally there will be valuation and legal fees to pay for.

If you fail to pay the loan off in time, there are likely to be penalties associated.

Make sure you are comfortable with the terms of the bridging finance in Surrey before you agree to it, and we can help with this.


Do all lenders provide bridging loans?

Not all lenders provide bridging loans, you require a specialist lender. Also, some lenders only arrange these loans through a broker, and this is where we can be of assistance.

We have assisted many Surrey residents and companies in arranging a bridging loan, and we are keen to help you if required.


How to explore your bridging loan options with The Money Hub

Call The Money Hub Limited on 0203 725 5830 and speak to one of our highly specialised and dedicated Mortgage Advisors or you can complete an enquiry form which will allow you to schedule a call time.

DISCLAIMER: These articles are for information only and should not be construed as advice. You should always seek advice prior to taking any action.

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Bridging Loan FAQ's

What is the average cost of a bridging loan?

Typical fees that are payable include:

  • Lender Arrangement Fee – this could be 1%-2% of the loan.
  • Valuation Fee – payable upfront and dependent upon the property value.
  • Legal Fees
  • Monthly Interest Charge – This is dependent upon the Loan to Value, Security, Overall project, credit profile and experience of the developer.
Is it worth getting a bridging loan?
Before taking out a bridging loan you should explore all finance options thoroughly such as a mortgage or secured loan and fully understand all the terms associated with the bridging finance. Speak to experienced advisers and be comfortable with the pros and cons. Bridging loans can be suitable finance, for example, to allow you to develop properties.
Bridging Loans Surrey
The Money Hub

Product Name: Loans

Product Description: Bridging Loans Surrey

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Kavita

Gary has been great from the start, very professional and friendly. this was my first commercial finance and he answered all of my questions no matter how small & explained everything very well, for me to understand the whole process. I would definitely recommend TMH & if needed use their services again.