Getting A Bridging Loan For A London Property
House prices may be facing a downtrend in London areas, yet demand remains high in a fast-paced market for homeowners and property investors alike. Bridging finance can give buyers the flexibility, and cash, to pursue all their available options.
Many property buyers in London may be unaware of the usefulness of bridging finance and how they work – here; we aim to explain the process and help give buyers all their financial options when it comes to a London property purchase.
The advantages of bridging finance for both property investors and home-owners
• Fast-finance - the primary advantage of bridging loans is the speed at which they can be delivered, allowing you to “bridge the gap” and make you a cash buyer. This can be especially useful in a competitive London market, and the whole process can be expedited for whatever purposes you require funds – loans can be secured from £50,000 to several million.
• Flexible in its application – Bridging finance can be applied to multiple scenarios that suit any property purchase – residential, commercial, property development or renovations. Providing you have adequate security, the loan can be used to bridge any gap when financing a property in London.
• Gives you the time you need – a bridging loan can offer breathing room for important financial decisions. Bridge finance gives the necessary time to find a suitable buyer, allocate funds for renovations, or proceed with property development plans without delay.
• “Rolled up” interest – While interest rates are more expensive in bridging finance, you can “roll-up” payments - negating long-term interest on the loan by repaying it earlier.
How are bridging loans commonly used in London?
- Residential property purchase – a primary use of bridging finance, if you’re a home-buyer, is to quickly snap up your next property when funds are otherwise unavailable.
- Fixing a chain break – If a buyer pulls out, this is known as a “chain break”. This scenario can leave you stuck in the middle; between selling and purchasing a new property. A bridge loan will solve this issue, allowing you to move ahead with a property purchase.
- Downsizing/Upsizing - securing the right property for you, situated in a desirable London location, could prove challenging without swift action and capital to hand. An investment in a bridge loan may be necessary to secure your dream property in a fast-paced market.
- Property development – property investors can snap up lucrative properties to convert into BTLs (buy-to-lets) to capitalise on high rental costs in competitive London locations. Alternatively, funds raised through bridging finance can be used by homeowners wishing to meet their property’s full market potential.
- Lease extension - a bridging loan can be used to extend a lease if you’re hoping to qualify for a mortgage with a mainstream lender.
- Buying a property at auction – auction properties require a percentage upfront, and need to be financed within 28 days. Bridge finance can raise the capital needed, allowing you to move forward.
What does a bridging loan for a London property cost?
Initially, you can use a bridge loan calculator to get a general idea of the overall cost of a bridging loan. However, the cost will vary depending on your case – it is best to seek a consultation with a specialist broker when proceeding with bridging finance.
There are also additional fees to consider, such as legal and broker fees.
Lastly, always consider your exit strategy
Bridging loans are typically secured against a property, yet you must still account for delays or oversights depending on what the finance will be used for.
When it comes to property development projects, renovation or conversions of buy-to-let properties etc., you must consider carefully anything that may hinder repayment.
Are you looking to sell the property, or refinance it using a residential or buy-to-let mortgage?
Selling a property whether it is an existing property you are using for security or the property you have bought or arranging a mortgage can take time so factor that into your timings.
How to find the right bridging loan for a London property
In contacting our specialist team, you can access all financial options at affordable rates from suitable lenders.
We can help get the right bridging loan for you to secure your London property or kick-start a property development project.
What we can offer:
- Residential, commercial and development finance – for all common uses, and fitting a variety of clients’ needs
- Flexible terms (1 to 36 months)
- FCA regulated and unregulated loans
- “Rolled-up” interest schemes
How we can help:
We can secure bridging finance for any type of borrower – limited companies, individuals (no upper age limit), sole traders, partnerships, and trusts.
- We have access to the entire short-term market
- We have established relations with a network of both niche and specialist bridging lenders
- And, depending on the complexity of a case, we can secure finance in under a week (5 to 7 days)
