There are several ways a commercial bridging loan can help you take advantage of the current climate. Purchasing at the right time could help you increase your property yield and support the UK property market. Here is our MFS top 5 uses of commercial bridging finance.
1. New office building
One of the most common uses for commercial bridging loans is to purchase new office buildings. We often work with brokers or clients who are looking to purchase a new building to:
- Start a new business venture
- Move office
- Expand their business and increase their office space
How MFS could help:
If you’re looking to expand your business or increase your property portfolio, a commercial bridging loan can help. Commercial assets often have a high net value which usually require a large loan. We have dedicated funding lines for our large loan enquiries. This allows us to deploy these funds in a quick and efficient manner, despite the loan size. This could help safeguard your deposits and meet tight completion deadlines.
2. Going semi-commercial
A semi-commercial property is a popular investment choice when it comes to utilising a commercial loan. They can be a good place to start for property investors who are new to commercial assets, as they use semi-commercial properties to seek to minimise potential risk, because income is received from at least two individual sources. This almost provides a form of income protection against delayed payments.
- The residential area will usually reside above the commercial unit. These residential dwellings will be flat(s) that can be rented out to tenants. Housing multiple flats may increase your monthly income. In these scenarios, you might consider using an estate agent to manage the building and residents.
- The ground floor will generally be utilised by the commercial business. This may also include the basement and/or the first floor, depending on the size of your asset.
Find out more about buy-to-let’s and managing renters in our Guide to Buy-to-Lets.
Case study: Borrower looking too acquire semi-commercial
3. Increasing Company Assets
Renting out an office building, either floor-by-floor or as one larger rental property can be a way to increase company income through unused or newly purchased space. Whether you’re looking to:
- Purchase additional building through your company to start a new business venture
- Rent out the space to alternative companies to receive a monthly income
If you’re looking to expand your company and increase your commercial assets, then a commercial loan can raise funds against current assets in order to purchase new.
How MFS could help:
You could use a bridging loan to initially purchase a property and avoid mainstream finance deadlines. With no early repayment charges, the bridging loan can then be paid back at the best time for the company. Our bridging loans are available from 3 – 21 months.
4. Renovations or conversions
Renovating can be a way to increase the overall value of a property should you be looking to:
- Sell the property in upcoming months after increasing its value
- Modernise the property to appeal to new buyers
- Refurbish individual commercial spaces to let them out individually
- Convert a commercial building into residential properties to sell on or let
A survey of 2,000 companies by CIPD uncovered that two-thirds are looking to introduce working-from-home on a regular basis. But that doesn’t mean they won’t be looking for commercial spaces to rent. The vaccine rollout is receiving positive feedback. The daily Coronavirus figures are reducing. As a result, key city areas such as London may see a rise in demand for rental offices or flexible hot desking spaces due to society’s demand for things to return to some semblance of normality.
5. Auction Deals
People often buy at auction for the opportunity to unlock hidden equity in rundown, unusual or older properties that have potential. Many properties in these conditions go for a reduced rate. If you’re looking to refurbish or convert a property to sell on for a profit or rent out at a later date, then an auction house could be the ideal place to purchase your next property investment. Renovation works could generate a strong profit upon reselling, particularly if you’re able to purchase the asset at a reduced price.
- Allsop’s May Commercial Auction: Average price for properties sold came to £674,231.39
- When compared to May 2020, Allsop’s latest auction saw an increase of 56.76% in the total raised.
Source: Allsop Auction House
When purchasing a property at auction, you’ll be given an average completion period of 28 days. This provides a faster way to purchase, when compared to a real estate agent. It can also stop other buyers from gazumping you.
Whether you need a commercial bridge loan or bridging finance for property development (permitted only), funds can be in your account in as little as three days. It will also provide adequate breathing space to prepare a long-term financial strategy.
Case study: Auction purchase in Yorkshire
Commonly asked questions:
What is a semi commercial bridging loan?
Our commercial bridging loans require at least 40% of the property to be commercial. This means that semi-commercial properties need to receive 40% of their total value from their retail unit.
How much can I borrow?
Your loan amount will depend on the property value and the loan-to-value you require. We lend from £100,000 to £20M with up to 75% LTV on all our products.
Am I eligible for a commercial bridging loan?
Our bridging loans are fast and flexible, meaning we can lend to a wider selection of borrowers. We provide loans on a case-by-case basis. By taking a step back, we consider the larger picture, not just the individual. Whether you’re new to commercial property or you have special/complex circumstances, contact us today to see how we can help. Examples of deals we will consider include applicants that may have:
- Missed mortgages
- Adverse credit
- Annulment of bankruptcy