For borrowing purposes below market value bridging loans are calculated using the open market value of the property or land being used as security rather than the traditional method of borrowing against the purchase price.
The below market value bridging loan strategy is popular with developers and investors when buying property or land where the purchase price has been negotiated and agreed with a discount below the actual open market value. This can allow borrowing up to 100% of the below market value purchase price.
Open Market Value is, in the opinion of the valuer, the probable price which a property would be expected to achieve in an open fair sale arm's length transaction and is the estimated amount that a property would sell for between a willing buyer and a willing seller on the date of the valuation.
Generally, bridging finance is available for periods of 3 months to 24 months, however some lenders don't have a minimum interest period, so effectively the bridge loan could be repaid within one month.
Yes, all bridging finance lenders will require an acceptable exit strategy to be in place, this provides confirmation and satisfies the lender on how you intend to repay your bridge loan at the end of the term, an experienced broker will be able to guide you on this. Below are a couple of acceptable exit strategies.
Sale of Property Exit.
Property developers and investors can use bridging finance when buying a house with the plan of reselling it as soon as it has been renovated and sold, in which case the bridge loan will be repaid in full from the proceeds of the sale of the property.
Buy to let Mortgage Exit.
This type of exit is popular with property developers, landlords and investors whose intention is to retain the property as a buy to let investment, the bridging loan is used for the acquisition and refurbishment of the property and the property is then rented out, the property is then refinanced with a buy to let mortgage against the new higher valuation which repays the bridging loan.
Most bridging loan lenders generally require applicants to submit their applications through an experienced broker who can help guide you through the process.
The property purchase price is traditionally used for calculating the LTV and max borrowing available.
We can provide a solution that uses the Open Market Valuation, enabling property developers and investors to borrow more with less cash outlay.
4hr decision in principle and Fast Completion.
Award-winning bridging loans with market leading interest rates and LTV's for property purchase and development projects.
The perfect finance product for Buy to Flip, BRRR and that situation where a quick completion is required.
Decision in principle in 4 hours and Fast Completion.
With drawdowns landing within 48 hours this is the ideal bridging product for any active developer to have in their toolkit.
It can be drawn upon whenever required, repaid or reduced and drawn again and again, interest is only applied to the account on the amount borrowed.
We have over 30 years experience and can offer innovative financing methods for developers and investors.
We offer Bridging Finance, Refurb & New Build Development Finance and Buy to Let Mortgages.
We'll keep you informed every step of the way and if required, continue to support even after completion.
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Easily assess the viability of your property project within 60 seconds, then if required, book a time slot to discuss your project with a funding expert.
Absolutely delighted with the service levels and attention to detail provided and was never left wondering what was happening with my residential development bridging application, I saved over £1000 in legal fees and it completed ahead of schedule. Happy Days.
Mr. C from Glasgow. Property Developer.