There are different types of bridging loans and each may attract different terms from the lender.The main difference is if the loan is secured on your primary residence or on another property and if it’s another property is it occupied or unoccupied.
Also when the lender assesses the loan to value they are willing to offer and if indeed they want to lend at all there are many factors.
These include but not limited to:
These properties can include properties that are leasehold with a lease of less than seventy years. Also properties under fifty thousand pounds. Lenders are very fussy about property close to mines, areas of landfill, flooding or subsidence.
Sitting tenants and Regulated Tenancies
Most lenders are unwilling to lend against property with long term sitting tenants. Regulated tenancies come under a similar category.
Leasehold property with a defective lease
Sometimes novice landlords don’t use proper solicitors to draw up lease agreements. A poorly done lease in the land registry can result in a lenders rejection for that property.
Properties with Boundary disputes or other legal problems
Planning applications need to be done correctly or a lender may find the property unfit to mortgage. Buy to let lenders don’t like properties with boundary disputes either.
Open Bridging Finance
Open bridging loads are loans that don’t have an exact date of repayment
Closed Bridging Finance
Closed bridging loans have a fixed cut off where the loan has to be paid back
Chain breaking – when a property purchase is under threat by the breakdown of the sale of another property
Buying at auction – property purchase where completion is required very quickly
Refurbishment – when some long term mortgage lenders refuse to lend based on the properties condition. The bridge can allow time for work to be completed then longer term finance can be put in place
Cash purchase – secure funding on an existing property to make an all cash purchase of another property. Having cash can allow for a very fast purchase.