Bridging loan for non standard construction property. How to get one.

Can I get a bridging loan for a non standard construction property?

Are you wondering if you can secure a bridging loan for a property that’s not built in the usual way? The UK market for bridging finance is diverse, offering solutions for various scenarios, including non-standard constructions. These properties, whether due to materials or design, don’t fit the typical mold, which can pose challenges for financing. However, bridging loans could be a viable option. This article explores how you can access bridging finance for such properties, what lenders look for, and tips to improve your chances of approval.

Understanding Non-Standard Construction Properties

Non-standard construction refers to buildings not made with traditional materials like bricks or blocks. This includes properties built with wood, metal, or glass, or using unconventional methods like prefabrication. These homes can be tricky for lenders to value due to their unique nature and potential resale issues.

Why does this matter for bridging loans? Because the loan is secured against the property, the lender must be confident in its value and saleability. However, the good news is that some lenders specialize in non-standard properties, understanding their value and market demand. Some lenders will even lend against the cash value where the surveyor states the property isn’t mortgageable.

What Lenders Look for in Bridging Finance Applications

When applying for a bridging loan, lenders will assess several factors. The property’s value and how quickly it could be sold are crucial. For non-standard properties, lenders might require a specialist valuation to address any concerns about the construction type and its market appeal.

Lenders also consider the borrower’s exit strategy—how you plan to repay the loan. This could be through selling the property or securing longer-term financing. A clear, feasible exit strategy is vital, especially for non-standard properties, to assure lenders of your plan’s viability.

How to Improve Your Chances of Getting a Bridging Loan

To boost your chances of securing a bridging loan for a non-standard property, start by choosing the right lender. Opt for one with experience in non-standard properties. Prepare a robust application, including detailed information about the property, a professional valuation, and a solid exit strategy.

Additionally, having a good credit history and sufficient equity in the property can help. Lenders are more likely to approve your application if they see you as a lower-risk borrower.

Benefits and Risks of Bridging Loans for Non-Standard Properties

Bridging loans can offer quick financing, which is great for auction purchases or properties needing quick sales. They can also be tailored to fit unique scenarios like non-standard constructions.

However, these loans usually have higher interest rates and fees due to the increased risk associated with non-standard properties. It’s crucial to consider these costs and ensure your exit strategy allows for timely loan repayment.

Case Studies: Successful Bridging Finance for Non-Standard Properties

Consider the story of a developer who used a bridging loan to purchase a glass-fronted property, considered non-standard due to its construction. With a detailed renovation and sale plan, the developer secured the loan by presenting a compelling case to the lender about the property’s unique appeal in a high-demand area.

Another case involved a borrower purchasing a prefabricated home. The lender was initially hesitant but was convinced by a thorough market analysis showing a trend towards eco-friendly, prefab homes, ensuring a solid resale market.

People Also Asked

What is considered a non-standard construction?

Non-standard construction includes properties not built with conventional brick or block. Examples are timber frames, metal structures, or any innovative building techniques that deviate from the norm. It can also include properties once considered acceptable but defective now. This could be because of previously accepted building techniques. For example properties built in the past using steel frame or concrete construction may have now reached the end of their recognised lifespan full start

Can I get a mortgage on a non-standard construction property?

Yes, but it’s more challenging than for standard properties. You’ll need to find a lender comfortable with the property type and possibly pay a higher interest rate.

Are bridging loans more expensive than regular loans?

Generally, yes. Bridging loans are short-term and carry higher risks, which is reflected in higher interest rates and fees.

What is the maximum loan-to-value ratio for bridging loans?

Most bridging loans offer a maximum LTV of 70-75%, but this can vary depending on the lender and the property type.

How quickly can I get a bridging loan?

Bridging loans can be arranged quickly, sometimes within a few days, if all the necessary documents are in order and the lender is satisfied with the valuation and exit strategy.