Below Market Value Bridging Loans.

 

Not sure how to finance your below market value property purchase? 

 

Below market value bridging loans allow you to borrow up to 100% of the purchase price when the purchase price is below the open market value.

 

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FAQ: Below Market Value Bridging loans Frequently Asked Questions

 

How Do Below Market Value Bridging Loans Work?

 

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.

 

Why are Below Market Value Bridging Loans Popular?

 

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.

 

What Does Open Market Value Mean?

 

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.

 

Is Bridging Finance a Short-Term Solution?

 

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.

 

Do I Need a Bridging Finance Exit Strategy?

 

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.

 

How do I Apply for a Below Market Value 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.

 

Get in touch for a no obligation chat about your project and learn how we work hand in hand with our clients to achieve the best possible funding solution.

 

Unlocking Potential: The Power of Below Market Value Bridging Loans

 

In the dynamic world of property investment, savvy investors are always on the lookout for opportunities to maximize their returns. One such opportunity arises from the acquisition of properties priced below their true market value. This is where Below Market Value (BMV) bridging loans come into play, offering a strategic advantage for those quick to act.

 

What is a BMV Bridging Loan?


A BMV bridging loan is a short-term financing solution designed for property transactions where the purchase price is significantly less than the property's open market value (OMV). These loans are particularly useful for investors aiming to buy, refurbish, and quickly sell properties at a profit.

 

The Mechanics of BMV Bridging Loans


A BMV bridging loan is a short-term financing solution designed for property transactions where the purchase price is significantly less than the property's open market value (OMV). These loans are particularly useful for investors aiming to buy, refurbish, and quickly sell properties at a profit.

 

Advantages for Property Investors

 

Increased Leverage: By basing the loan amount on the OMV, investors can often borrow more than the purchase price, reducing the amount of personal capital required.

 

Speed: BMV bridging loans can be arranged quickly, allowing investors to capitalize on time-sensitive deals.

 

Flexibility: These loans are typically interest-only, with the principal repaid at the end of the term, providing investors with flexibility in managing cash flow.

 

Profit Potential: Purchasing a property below its market value inherently carries a higher margin for profit, especially after value-adding renovations.

 

Considerations and Risks

 

While BMV bridging loans offer attractive benefits, investors must also be aware of the risks. The short-term nature of the loan means higher interest rates, and the reliance on a swift sale or refinancing requires a clear exit strategy. Additionally, accurate valuation of the property's true worth is crucial to avoid over-leveraging.

 

Conclusion

 

BMV bridging loans are a powerful tool for property investors, enabling them to make bold moves in the market. With the right property and strategy, these loans can unlock significant potential and yield substantial returns. As with any financial decision, it's essential to consult with financial experts to navigate the complexities of BMV financing. I hope you find this article insightful and informative. If you're considering such an investment, it's always prudent to seek professional advice to ensure it aligns with your financial goals.

 

open market value Versus Purchase prIce examples

Borrow Against Open Market Value
  • VALUE: £200,000
  • PURCHASE PRICE: £160,000
  • 75% LOAN: £150,000
  • CASH DEPOSIT: £10,000
  • LTV AGAINST VALUE: 75%
Borrow Against Purchase Price
  • VALUE: £200,000
  • PURCHASE PRICE: £160,000
  • 75% LOAN: £120,000
  • CASH DEPOSIT: £40,000
  • LTV AGAINST VALUE: 60%

WE SPECIALISE IN

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BMV Bridging Loans

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.

Our BMV Bridging Loan Experience.

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Bridging Loans

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.

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Why Use The Buy Refurbish Refinance Rent Strategy?

The BRRR strategy is a popular investment technique commonly used by experienced landlords and investors.

The strategy is a great way to build a property portfolio and maximize return on investment.

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3 reasons to choose us as your SOURCE FOR PROPERTY FINANCE.

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We have over 30 years experience and can offer innovative financing methods for developers and investors.

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We offer Bridging Finance, Refurb & New Build Development Finance and Buy to Let Mortgages.

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We wanted to build an app that had a real convenience and benefit to others in our property and finance world.

 

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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.

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