How to secure cheap bridging finance

With recent reports showing that property bridging lending increased to £4.2billion in April, it’s clear that bridging finance has well and truly shed its negative reputation. Increased regulation and lower rates than ever before means that bridging loans are now both a viable and desirable finance route for borrowers looking to complete a range of projects.

Whether you are looking to finance a commercial, buy to let, or a residential property, the cheap bridging finance rates now available can give you the flexibility to move quickly.

RATES

So, if bridging loans no longer represent an expensive form of borrowing, just how cheap can the rates be? We work with a market-leading bridging lender, who can offer rates under 0.5% a month for loans under 50% loan to value (LTV) gross.

Commercial (including but not limited to shops, factories, and warehouses)

  • Rates as low as 0.95% per month under 50% gross LTV

Residential investment (BTL)

  • 0.65% per month under 50% gross LTV

Regulated Residential

  • 0.49% per month under 50% gross LTV

If you require a higher LTV, this is also possible for slightly higher rates—this lender can lend up to 70% LTV. For all the above, the lender arrangement fees start from 2% of the loan amount and can be added to the loan, so there is no need to pay this up front. The interest is always added to the loan, so there are no early repayment fees, offering another layer of flexibility.

This lender has completed transactions within just two weeks, which is a remarkably quick turnaround. This is because this lender focuses on your exit strategy, e.g. the sale of the property, rather than your income.  Other bridging lenders take a more extensive look at your overall situation, which slows down the process considerably.

They can take a view on complex properties, including cases which other lenders may not be prepared to deal with. For example, this lender will consider mortgages on multiple usage properties, such as a building containing both a flat and a shop. This lender is also flexible on their criteria in other ways; for example, they can work with clients who have minimal adverse credit history.

CASE STUDY

As such, this could be the ideal lender for clients with unusual circumstances or complex income streams. I recently used this lender to assist a client with bridging finance who urgently needed to complete within two weeks, as she otherwise risked losing her property. My client owned a share in a 40-acre farm, having agreed to buy £2million of the property initially and then buy the remaining £2million two years later.

She approached me two weeks before the due date for this, so speed was absolutely of the essence. The farm included a farm house (her residence), a cottage let to a farmer on a lifetime tenancy (a serious problem for many lenders), an Olympic horse arena, stables and a mobile home. The stables and mobile home were also let.

My client also required a 24-month bridge, which is an extremely unusual request. She intended to repay the loan by selling another plot of land, but this was expected to take a long time, so a typical 12-month bridge would not have been appropriate. However, as she lived on the land, this would generally mean the bridge would be a regulated loan; regulated bridging loans can’t be longer than 12 months.

OUR SOLUTION

Fortunately, the lender acknowledged the farm house she lived in only took up a minimal amount of the 40-acre commercial plot; they therefore classified the bridge as a commercial loan, meaning they could extend the terms to 24 months. The lender was also prepared to retain the interest, allowing the client to repay both the loan and interest upon the sale of her land.

They provided this loan at a very low rate of 0.75%, a record rate for a commercial loan. The deal was completed within two weeks as they did not need to assess her income. My client was understandably delighted with this solution; this is a clear example of how we are able to assist on the most complex of cases in a timely and efficient manner.

The most important thing is that your case is presented in the right way; a mortgage broker such as Enness can assist you with this, as we have a wealth of experience in securing cheap bridging finance for our clients.

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