Bridging finance has been growing in popularity across the UK for some time. But what is particularly interesting is how more senior borrowers (of retirement age and older) are taking an interest in bridging loans than ever before.

Despite the fact that seniors are considered more financially savvy and asset-rich than their younger counterparts, they are often rejected by major lenders for even the simplest financial products. The reason is that, as their long-term earning potential is lower and they may have no formal proof of income, they fail to meet the most basic checks carried out by mainstream lenders.

As a viable and cost-effective alternative, short-term lending is attracting the attention of seniors in record numbers. Issued primarily or exclusively on the basis of security, short-term loans like bridging finance can be quicker, easier, and less stressful to arrange.

Popular uses for bridging finance

Seniors (and those over 50) are generally considered to be more financially experienced than all younger demographics. Therefore, they are able to see the potential value of bridging finance that goes far beyond any comparable mainstream loan.

While bridging finance can be used for almost any purpose, several common trends have been identified in the spending patterns of seniors taking out such loans.

The most prominent of which are as follows:

• Purchasing a second or even third home to be fixed up and subsequently sold for profit.
• Buying a property at auction (to renovate or relocate to) at a price well below its market value.
• To cover the costs of extensive home repairs or renovations before relocating or downsizing.
• Buying flats or houses to let out to tenants to generate long-term, regular income.
• Taking advantage of investment opportunities (shares, forex) under the advisement of experienced traders.
• Home improvements before relocating.

Perhaps the single most popular use for bridging loans among seniors is carrying out home improvements and alterations before relocating. Whether you are downsizing or looking to upgrade to a superior property, it simply makes sense to get the best possible price for your current home.

Quite often, a few enhancements here and there (funded by a bridging loan) can significantly boost the property’s market value, enabling the loan to be repaid in full and making a generous profit when the sale closes.

Seniors often make the decision to move to more desirable locations or simply wish to be closer to family and friends upon reaching retirement. If the property proves difficult to sell for a decent price due to its state of repair, strategic use of bridging finance really could make all the difference.

Independent broker support

If you are considering bridging finance for any purpose and would like to ensure you get the best possible deal, independent broker support is essential. An established broker can conduct a whole-of-market search on your behalf while ensuring your requirements are met with an appropriately affordable and flexible deal.

For more information or any of the above or to discuss bridging loan applications in more detail, contact a member of the team at Bridgingloans.co.uk today.

Bridging finance is a short-term loan, typically arranged within a matter of days and repaid after a period of one to 18 months. As the name suggests, bridging loans are designed to ‘bridge’ financial gaps when significant sums of money are needed for urgent purchases or investments over the short term.

When might bridging finance be useful?

As a property investor or developer, there are instances in which a bridging loan could be the ideal financial product. Examples of these include the following:

Buying a property at auction with the intention of renovating and selling it at a profit

Using bridging finance to cover various project expenses, subsequently repaying the loan when the property is sold or refinanced

Any property development business encountering a period of limited cash flow could use a bridging loan to ‘bridge’ this temporary shortfall.

Bridging loans can also be secured against all types of properties (including dilapidated and uninhabitable properties), which major banks may refuse to finance.

What is the difference between a closed bridging loan and an open bridging loan?

The difference between open and closed bridging loans is whether the borrower has an exit strategy in place. If you know exactly when and how you will be repaying your loan, you can apply for a closed bridging loan with a fixed repayment date. If there is still some uncertainty as to your repayment plan, you can apply for an open-bridging loan with no exact fixed repayment date.

Closed bridging loans often have more competitive rates of interest and lower overall borrowing costs.

When does it need to be repaid?

An agreed-upon repayment date for the loan will be agreed upon with the lender during the application process. Typically, property development bridging finance is repaid when the property being financed is sold, let out, or moved onto a longer-term loan or mortgage.

How much does it cost?

Interest rates and overall borrowing costs vary in accordance with the requirements of the borrower and the policies of the lender. Monthly interest rates on competitive property development bridging finance start at less than 0.5%. The quicker you pay back your loan, the more you save.

Who is eligible?

Eligibility is assessed on the basis of the applicant’s current financial position, property development track record, and the nature and viability of the proposed project. The property they wish to secure the loan against will also be considered, as will their credit history and income level.

Maximum loan-to-value ratios of 80% or more are available with residential properties, though lenders often restrict themselves to 70% for commercial properties. If you have any questions or concerns regarding your eligibility or would prefer a loan with a higher LTV, discuss this with your broker before applying.

What additional costs apply with property development bridging finance?

Additional fees and levies vary from one lender to the next. Depending on whom you work with, your property development loan could be subject to administration fees, arrangement fees, completion fees, valuation fees, legal fees, security fees, early repayment fees, and so on.

How quickly can I access the funds I need?

It is often possible to complete the application process and access the money you need within a matter of days. Bridging finance provides an ideal alternative to complex and drawn-out property loans and mortgages when time is a factor.

Accelerating the process is simply a matter of ensuring you have all the documentation you need and can verify both your credibility and the viability of your project. All of which can be simplified with professional broker support.

Can I get a property development bridging finance with bad credit?

If your project is viable, your track record is exemplary, and your credit status is sound, poor credit need not stand in the way of competitive property development finance. Some bridging lenders are more than willing to take all aspects of their applicants’ cases into consideration, rather than basing their decisions purely on credit scores. It is essential to strategically target lenders who welcome poor credit applicants.

How much can I borrow for a property development project?

Theoretically, there are no limits in terms of how much you can borrow. Bridging finance for property development is generally available in sums starting from £75,000 and up, though with no upper limits. Eligibility and maximum loan allowances are calculated in accordance with the applicant’s financial situation, requirements, and proposed use of the funds.

How can I find out more about property development bridging finance?

Whether you have decided to go ahead or are simply considering a bridging finance application, it pays to consult with an independent broker ahead of time. Along with helping you understand the various options available, an established broker can ensure your applications are submitted only to the most appropriate lenders.

For more information or to discuss the potential benefits of property development bridging loans in more detail, contact a member of the team at UK Bridging Loans today.

Being hit by an unexpected tax bill is never an enjoyable experience. Businesses, investors, and property developers may find themselves facing tax obligations at a time they didn’t expect. Irrespective of the nature and extent of the bill, settling tax liabilities as quickly as possible is essential in order to avoid serious legal consequences.

When time is a factor, bridging finance can be the perfect solution to settling tax obligations in a quick, convenient, and cost-effective way.

Expecting the unexpected

Most tax bills are completely predictable and can be budgeted for. Businesses and investors are therefore expected to conduct their financial affairs responsibly in order to ensure their ability to meet their tax obligations when required.

Nevertheless, there are various instances where even the most responsible organisations and individuals encounter demanding and difficult situations. For example, anyone inheriting an estate with a value in excess of £325,000 will need to pay inheritance tax. Capital gains tax is also payable when selling capital assets, such as properties.

One of the most common instances where specialist types of bridging loans are used to cover tax payments is when a commercial property is purchased. When a business or an investor buys a commercial property, they are liable for an additional VAT payment of 20%. This could amount to tens of thousands of pounds on top of the purchase price of the property, alongside all other fees and outgoings.

Companies that are VAT-registered can reclaim this money, but not until the current VAT accounting period comes to an end. This means waiting up to three months for the VAT refund, during which the buyer must contend with a significant shortfall.

If it is likely that this 20% VAT payment would have negative implications for the buyer, they could take out a short-term bridging loan to augment it. After which, the balance on the loan could be repaid in full (plus a small interest fee) when the VAT is returned, ensuring their cash flow isn’t adversely affected for the duration.

Bridging loan eligibility

The potential benefits and applications of bridging finance are limitless. Establishing eligibility for a bridging loan can be surprisingly simple, starting with a bridging loan calculator to get an idea of the available options.

Bridging finance can be secured against almost any type of property, with no specific limitations on how much can be borrowed. In addition, a bridging loan can often be accessed within 2 to 5 working days, making it the ideal option for covering urgent outgoings and unexpected bills.

Even with an imperfect credit history, there is still every chance you will qualify for a bridging loan if you can provide security to cover the balance in full.

For more information on the benefits of using bridging finance to pay urgent and unexpected tax bills, book your obligation-free consultation today with a member of the team.

Property development financing is available in a variety of forms to suit most requirements and budgets. Increasingly, bridging loans are being sought by property developers across the UK to fund large and small projects.

But what is it about the bridging loan that makes it such a popular choice? Why are more investors choosing bridging loans over conventional property development finance than ever before?

Here are some reasons:

• Bridging loans are fast: Bridging loans are one of the fastest-access lending streams available for property developers. From application submission to provision of the funds, it can take as little as 3 to 5 working days, making it an ideal option when time is a factor.

• Bridging loans are flexible: Most bridge loans are tailored to suit the exact requirements and budget of the borrower. Along with flexible repayment terms, it’s also possible to qualify for a bridging loan with a poor credit history, due to bridging finance being far more flexible than more traditional mainstream loans and because monthly payments are rarely required.

• Bridging finance can be used for almost anything: Although most often used for a property purchase, a bridging loan can be used for almost any legal purpose. In addition, it’s also possible to secure a bridging loan against almost any type of property or land, provided it covers the total cost of the loan with sufficient excess.

• Competitive borrowing costs: Bridging loans are short-term loans designed to be repaid within a matter of months rather than years. Interest rates start at below 0.5% per month, coupled with minimal overall borrowing costs. Early repayment is also usually an option with bridging loans without facing heavy penalties or levies.

• Auction property purchases: One of the most common applications for bridging loans in the property development sector is for the purchase of auction properties. The funds required to purchase a property at auction can be made available quickly, with the loan subsequently being repaid in one lump sum when the property is sold or refinanced.

• Purchasing uninhabitable properties: Many mainstream lenders will only issue loans against properties that are considered habitable at the time of the application. With bridging finance, it is possible to secure a loan against an uninhabitable property with the intention of renovating or redeveloping it.

• No deposit is required: Another benefit of bridging finance is that no physical deposit is often required to set up the loan, as additional security can be used to cover this. Eligibility is determined primarily by the value of the property or land used to secure the loan.

For more information on the benefits of bridging loans as a form of property development finance, contact a member of the team at UK Property Finance anytime.

It’s not uncommon for buy-to-let investors to set their sights on properties in need of repairs and refurbishment. The reason being that, as competition for such properties is relatively low, they can often be picked up at rock-bottom prices. After which, the repairs and refurbishments can be performed at an equally low price before turning a profit on the property by letting it out to tenants.

Unfortunately, targeting properties in need of renovations or refurbishments can lead to problems with financing the purchase. This is because the vast majority of traditional lenders will only issue mortgages against properties that are considered habitable at the time of the application. Even if you can demonstrate your intention and capacity to renovate the property after the purchase, you’re unlikely to qualify for a traditional mortgage.

In addition, landlords often seek to expand their buy-to-let property portfolios by purchasing homes at auction. Some are in need of repair; others are perfectly habitable. In both instances, however, it is usually necessary to pay the full purchase price of the property (and any additional fees) within 28 days, sometimes sooner. Needless to say, this is nowhere near enough time to organise a traditional mortgage.

Combined with the increasingly restrictive lending criteria of major banks for buy-to-let landlords, all of the above places prospective investors in a tricky position.

A flexible and accessible alternative

This is precisely why bridging loans are fast becoming the new top choice for buy-to-let investors. A dynamic and flexible type of secured lending, bridging finance goes far beyond the limitations of traditional high-street mortgages.

For one thing, most bridging finance specialists are uninterested in the condition of the property. Even if it is in a pretty sorry state of repair, it has no real consequence for the lender. Instead, the only thing that matters is the borrower’s capacity to cover the loan with acceptable collateral. This may be provided in the form of the property being purchased or any other property currently owned by the applicant.

Likewise, bridging finance can be uniquely convenient and accessible for purchasing buy-to-let properties at auction. Irrespective of how much money is needed, it can typically be organised and transferred to the applicant within five working days. Again, it’s simply a case of the applicant putting up the necessary collateral to cover the loan. The nature and condition of the property being purchased are of no real interest to the lender.

What matters most with a bridging loan are two things: collateral and a viable exit strategy. By exit strategy, this means a clear and validated method of gaining access to the money needed to repay the loan on the agreed date. It’s possible to take out a bridging loan without an exit strategy, but this may, depending on the lender and the loan, result in higher overall borrowing costs.

Speaking of which, the potential value for money of a super-short-term bridging loan also appeals to buy-to-let investors. In many instances, it’s possible to borrow significant sums of money for less than 0.5% per month. Just as long as the loan is repaid quickly (in accordance with the agreement of the lender), overall borrowing costs can be kept to absolute minimums.

The importance of comparing the market

Now more than ever, the importance of comparing the market in full cannot be overstated. Particularly when considering buy-to-let investment opportunities, it is essential to consider as many deals as possible from as many lenders as possible.

The quickest and easiest way is to take your case to an independent broker, who can compare deals from a panel of specialist lenders on your behalf.

The housing situation for most would-be buyers in the UK right now is pretty bleak. Particularly for first-time buyers, millions of whom face the prospect of never owning their own home.

But what’s interesting is how, at the opposite end of the spectrum, individuals interested in buying second homes (or holiday homes) are increasingly setting their sights overseas. Given the inevitable complications of buying abroad, why are there more Brits than ever before considering international property investments?

The overseas property market

For most, the primary motivating factor is affordability. In some regions, average property prices have plummeted by as much as 70% over recent years alone. As a result, Brits buying abroad are able to make their budgets stretch considerably further than they would at home.

What’s more, the desire to snap up bargain properties while the opportunity exists is prompting a growing number of borrowers to consider more immediate short-term loans.

Florida has become an appealing investment prospect for more British homebuyers than ever before. Primarily due to sub-prime issues, average house prices in several attractive regions across Florida have fallen by more than 70%. Over in Spain, research suggests there are currently more than 700,000 unsold holiday homes, which are plummeting in value all the time. In addition, average house prices in several key coastal regions have fallen by around 50%.

For some, the appeal lies in the prospect of purchasing an attractive overseas property to let out. For others, it’s a case of being able to pick up a dream holiday home at a bargain price. Or perhaps a second home to eventually move to for permanent residence during retirement.

No matter how extensive or limited their budget may be, would-be buyers are finding overseas investment opportunities near irresistible.

Local mortgage complexities

One of the biggest obstacles standing in the way of overseas property ownership tends to be arranging finance. For obvious reasons, getting a local mortgage from an overseas lender can be far more complex than organising a mortgage at home. Lending criteria and eligibility in general differ significantly from one lender to the next, as do interest rates and borrowing costs.

For most, it’s a case of hiring a local lawyer and/or real estate expert to represent them in their absence. All of which means further costs and complications. It can also be a time-consuming process, which isn’t ideal when the intention is to secure a bargain property while the opportunity exists.

Bridging loans to purchase overseas homes

This is perhaps why bridging loans have become a popular choice among Brits buying abroad. With so many quality properties being sold for exceptionally low prices, it’s very much a case of first come, first served. Procrastinating for as little as a few days could see the property of your dreams being snapped up by someone else.

Traditional mortgages (at home and abroad) have a tendency to take several weeks to arrange. With a bridging loan, the money needed to pay for a property outright can be accessed in as little as three days. Just as long as the applicant has sufficient collateral to cover the cost of the loan, the application process can be surprisingly simple.

Of course, the key proviso with a bridging loan is ensuring you have a valid exit strategy. That being, a plan for repaying the loan in full a few months down the line Bridging loans are therefore unsuitable for buyers looking to spread the costs of their property purchase over several years, but they can be uniquely cost-effective for those able to repay more promptly.

Independent advice

With such a broad range of options available for financing an international property purchase, it’s important to seek independent advice at the earliest possible stage. Consider the available options, establish your budget, and conduct a whole-of-market search in order to ensure you get the best possible deal from a reputable lender.