What can I use a residential & buy-to-let bridging loan for?
Residential bridge finance can be used where a property investor needs to move quickly. It can also be used where the investor does not necessarily meet the requirements of a traditional high-street lender. As bridging lending is unregulated, it is often much more flexible than the mainstream banks.
The four main reasons to use a buy-to-let bridging loan are:
1. To counter delays caused by long-term lenders
Many borrowers use a residential or buy-to-let bridging loan because they are fast. Traditional lending is a long process. In many cases, it can take up to 130 days – even for a seemingly simple application. This delay can put the borrower’s purchase at risk of falling through, or open to gazumping tactics from other buyers.
2. To purchase new build investments
Buying new build properties is particularly popular with overseas clients. The period of exchanging and completing on a new build is generally set by the developer and often around 2 weeks. Not having their finances sorted in time, might put the borrower’s deposit at risk. A residential bridge loan is usually required when the buyer is not able to secure the funds through a traditional lender by the set completion date.
3. To buy a property at auction
Auctions can be a great place to look for good value properties, commercial or residential real estate alike. They are also popular for those looking to work on refurbishment projects. They can redecorate and refurbish, and then resell the property for a potential profit. Auction finance is designed to move quickly, as auction houses usually provide a tight completion window of 28 days.
4. To release funds for other ventures
A client might look to expand their property portfolio. Residential bridge finance can be a short-term solution for purchasing commercial assets or embarking on other business ventures. Much like with residential properties, this is usually due to the speed & flexibility in which funds can be deployed. They can secure their buy-to-let bridge loan on the residential asset to release funds. If they are purchasing a commercial property, there is also the option to look at a commercial bridging loan.