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If you want to purchase land, you may need bridging finance to help you buy it. This financial help can be useful until you can sell your existing property. You can repay this loan with the amount you receive from the sales earnings. Bridging finance is a short-term loan used for various purposes, including real estate transactions. Thus, it’s essential to understand how bridging finance works and how it can benefit you before deciding whether to pursue this type of financing. This blog post will explore bridging finance for land purchases. We’ll also provide tips on getting approved for bridging finance. So, if you’re curious about bridging finance, read further.
What is a Bridging Loan?
A bridging loan is a brief-term, interest-only loan you can obtain from persons who require quick access to funds. It is a loan to “make the financial transition” until you can secure the additional financing (like a mortgage). You can typically use this loan for property and business-related transactions. When a borrower utilizes property (or land) as collateral for a loan, this is called secured financing.
What is a Land Bridging Loan?
A land bridge loan is a brief-term loan secured by a plot of land that usually has no houses or other facilities. You might be previously using the property for equestrian activities, farming, stocking goods, or parking. Or it can be just a portion of land with future development prospects. It will be valuable, regardless of its current or historical usage.
We commonly witness developer customers buying a block of land using bridge financing before applying for planning approval. To create a housing development or even commercial properties. Such transactions are ideal for bridge funding because they usually need to complete fast.
For Which Purposes May I Utilize a Land Bridge Loan?
You can use land bridging finance for nearly any purpose as long as you can offer real estate as collateral and have a way to repay it.
What is the Purpose of Bridge Financing for Land?
You can refinance a current debt or purchase land with a bridging loan. Moreover, some lenders prefer to release equity if there is enough cash cushion. So that they can provide you funds from the sales earnings of the property as time passes. Due to the highly specialised nature of such transactions, land purchases mostly occur through an auction.
You can contact a P2P lending website to take a bridging loan for land. For example, you can buy ten acres of development land from an investor. You can use the loan to purchase the land rapidly. That is because such transactions mainly depend on quick property selling and buying. So if the deal is on the table and the investor needs money fast, the land bridging loan can be the best option. If you want to do construction work on the land, you can pay back the loan by selling other properties. As a result, you can proceed to receive the planning rights for real estate construction work on the land.
What are the Key Attributes of Bridging Loans for Land?
- You can get a bridging loan UK for up to seventy per cent Loan to Value.
- Interest rates start from a little less than one per cent every month.
- Loan terms reach as long as thirty-six months.
- The least loan amount is £50,000, with no maximum loan limit.
- You can get loans from all the famous P2P lending platforms in the UK.
What are the Lending Criteria for Land Bridging Finance Loans?
We are providing the lending requirements for the land bridging loans below:
- There is a requirement for the first charge.
- You can apply for the second charge loans in specific scenarios.
- You may not need to start your construction project with the planning consent. Moreover, if there is no planning consent, there will be restrictions on the LTV (Loan to Value ratio).
- You can do lending based on Open Market Value.
- Also, you can apply for loans with no personal guarantees.
- You will require the property valuation.
- It would be best if you created a feasible exit strategy.
Details Necessary for Receiving Land Bridging Loan
- Complete land address.
- All the title numbers.
- Details of the land, and report on its current utilization.
- Get any current/ past valuation reports.
- Information on Sales Particulars.
- Details about borrowers, consisting of Company Name or other facts.
- Information about the Company Number. Also, if it applies to you.
- Resumes/Biography along with any experience that relates to the transaction.
- Provide information on any current planning rights.
- A planned exit strategy.
How Do You Meet the Eligibility Criteria for Land Bridge Loan?
The property owner must possess adequate equity in the land to pay for the loan they take from the P2P lending website. The borrower should also repay this type of loan without any defaults. The highest LTVs are as much as seventy per cent with planning rights. Or fifty per cent without planning rights.
How P2P Lenders can Help in Taking a Bridging Finance
The P2P lending platforms provide funds for property constructors, investors, and potential lenders for property banking or construction. So whether you require quick financing to gain benefits from a time-sensitive offer or have to re-invest, you can reach out to the P2P lender. These lending platforms can also help when you require preferable planning consent. Or when you want to start simple construction work. The lending platforms can provide the necessary funding for even the most tricky scenarios.
No transaction is too difficult to execute for the P2P lenders. They give importance to individual cases according to their valuable points. Also, the P2P lenders are specialists in providing solutions so that a borrower gets a complete advantage. They allow them to borrow money quickly.
If you want to buy land, bridging financing can be necessary to help you pay for it until you can sell your current home. You should utilize a short-term loan, bridging finance, for real-estate-related transactions. Before deciding whether to pursue bridging financing or not, it’s critical to comprehend how it functions and how it might help you. In this article, we described bridge financing for buying land and examined some of its aspects. We also advised on applying for a bridging loan and what to do if you run into issues. So thanks for reading our post on bridging finance.