LEADING UK BROKER FOR
Land Bridging Loans
If you’re looking for land bridging loans, we have a range of flexible solutions to suit your needs. While many providers won’t offer a loan if you haven’t secured planning permission, we can still help you with financing options.
What is a Land Bridging Loan?
Land bridging loans are short-term financing solutions for land with no structures or buildings. While this is usually the case, in some situations, the plot of land might have a building. The plot in question is generally agricultural, equestrian, garages and land with commercial or residential development potential.
The most common purpose for land bridging loans is for investors and property developers can purchase a plot and change the intent of use. Every developer needs to obtain planning permission, and the waiting times can often be lengthy.
A bridging loan enables you to apply for permission to build structures and make alterations – then you’d move onto another financing option while you complete the build and sell it for a profit.
Are Bridging Loans Easy to Get?
Other factors might make you an attractive candidate for securing a bridging loan island that shows potential for commercial and residential uses or a plot with lapsed planning permission.
While it seems complicated, land bridging finance is relatively simple to obtain, as long as you’re aware of the potential limitations a provider might judge you on.
Who Is Eligible For Bridging Finance?
When it comes to securing finance for land, pretty much anyone can apply for a loan. We regularly work with the following applicants:
- Offshore Companies
- Limited Companies
- Pension Funds
- LLP Companies
Can You get a bridging loan on land?
If you’re unsure whether you’ll be an attractive candidate for a land bridging loan, it’s best to contact our friendly team of professionals. We’ll discuss your unique circumstances and generate a realistic outlook of how much finance you’ll receive and the repayment plan.
Numerous factors that might impact your opportunity of getting a bridging loan include your personal background, the development opportunity the plot presents and any collateral you can offer as a safeguard.
Generic providers will usually charge higher interest amounts to ensure there’s a speedy repayment incentive. Still, as a specialist bridging finance provider, we’re confident that we can support you with all of your financing needs.
What About Exit Strategies?
Having a solid exit strategy will increase your prospects of securing a land bridging loan with reasonable repayment options. In simple terms, your exit strategy is a repayment plan, and it provides financing companies with vital information so they can make a decision.
Development options are the same as commercial finance, so if you’re planning to purchase land to turn it into a business venture, you’d use this option. Development finance can be used to buy the necessary materials and resources to complete a commercial project.
In most cases, a lender won’t release the total amount and instead will issue payments in stages. Based on the continuation of your development and its increase in value.
As you can see, commercial finance isn’t guaranteed, so it’s essential to consider the viability of your land purchases and the long term prospects they offer.
While some people shudder at the prospect of building their property, others embrace it as a challenge. If you’re searching for an eco-friendly home, it can be more cost-effective to buy a plot of land and build upon it.
A self-build mortgage is suitable for people completing an entire DIY project or hiring a contractor to complete the build. When it comes to obtaining a self-build mortgage, some lenders will perceive the project as high-risk.
Most will request 25% as a minimum deposit, while others ask for 50%, but the good news is that building a custom property often means it will generate a much higher value.
Selling at a Profit
Buying a plot of land can be a tricky business – especially if you’re competing at an auction. If you have an idea of the land you want, obtaining a bridging loan can help you secure it and then move onto either self-build or development finance options.
When you sell the land for a profit, you’ll be able to repay the loan.
Remortgaging to Pay Off a Loan
Few people choose the remortgaging option as an exit strategy because it requires extra funds to build upon the plot of land. If you have this option, you can build upon the plot of land and remortgage the property based on its total value.
Choosing to purchase or refinance land isn’t a decision you should take lightly, and if you fail to meet your repayment scheme, your plot of land – and the property you build may be repossessed.
Is a Land Bridging Loan Right For Me?
Before considering whether land bridging finance is suitable for your needs, it’s essential to look at vital factors.
Will you be applying for property finance?
Land bridging loans can be the ideal solution to your needs, but you should consider whether you plan to apply for residential finance or commercial finance. If you purchase land without intent, then it won’t be easy to make repayments.
Property finance gives you an exit strategy, where you’ll be able to sell on the land for a profit. A self-build mortgage is similar because the addition of a property means a high increase in value.
Do you have experience in dealing with property?
Having experience in land investment and property development isn’t essential, but it can make you a more attractive prospect to lenders. Suppose you’re working on a large development project. In that case, the individuals that decide on the loan amount might be encouraged to offer a considerable investment if you’re able to showcase previous projects.
Is a good credit history essential?
As with many loan providers, you don’t need to have the best level of credit, but your rating and history will determine the loan secured. Individuals with an impressive credit history will be able to take advantage of low-interest rates.
When you have a poor credit history, it’s important to show lenders you have an exit strategy. This will give them peace of mind, but it doesn’t guarantee you’ll secure your desired loan amount.
When it comes to our providers, we look at applications individually and measure the merits of each. Your loan term will depend on how viable your project is and whether you’ll be able to make repayments.
The Loan to Value (LTV) amount
The loan to value amount refers to how lenders assess the risk of offering money to a borrower. For example, if you purchase a plot of land for £100,000 and secure a loan for £80,000, the loan to value amount will be 80%.
We’ll use this calculation to explore the likelihood of you paying back the original loan and potential value increase once all work is completed.
Do you have planning permission?
Can Limited Companies get bridging finance?
Get in Touch With us Today.
If you’d like to learn more about bridging finance loans and have questions about loan to value amounts, please call Loan X Today. Our team of professional financial advisors are authorised and regulated to provide you with valuable information and discuss your options regarding commercial and residential property.
We look forward to talking your call and will be happy to talk you through our extensive range of financing solutions.