introducing steve mears – independent financial advisor the money man
Bridging finance – is it really expensive?
“
There is a perception that bridging finance is extremely expensive and should be avoided at all costs. If you’ve ever had a conversation with someone who’s caught in an awful house moving chain, and suggested a bridging loan, you’ll almost certainly have seen them recoil in horror!
In reality, bridging finance can be something akin to your flexible friend. Is it more expensive that a regular mortgage, or loan? Maybe, but maybe not. It all comes down to need and to risk. Bridging finance enables a great deal of flexibility when it comes to terms and could make the difference to whether your project gets off the ground at all. So for specialist projects a bridging loan could be your ideal solution. As an example, if you’re considering a buy to let mortgage, or even a regular mortgage, the property must be a minimum acceptable state to be considered viable to a mortgage lender. The property would need to have some semblance of a kitchen, a bathroom and sanitary facilities. In other words, it must to be habitable, with the basics such as running water and a flushing loo! Some lenders may go a step further and insist on a heating system being in place and access to hot water. If you’re considering a property that requires renovation and doesn’t have these basic facilities in place, bridging finance could be the best option. However, you are still going to need to work with a lender who’s best for your particular circumstances. The reality is that if you’re acquiring a property that is lacking a roof or is essentially a shell, the lender needs to off-set the risk by reflecting it in the lending rate. This may be one of the reasons why bridging finance is considered expensive. Yet is it really? Put yourself in the lender’s shoes for a moment. Even if on paper the investment or project
makes perfect sense, anyone who has been involved in a building project will tell you that there’s a great deal that can go wrong between the start of a project and recognising the value of an investment. Even the most experienced developer can get caught out, and for that reason, the experience of the borrower can also be a factor in whether to lend and in the prevailing interest rates. The flexibility available to the borrower can largely off-set many rates concerns. One example is because a bridging loan can be a fantastic tool for maximising cashflow. As a borrower, you can make monthly payments or have the payments rolled up until your investment is realised or refinanced through mainstream lending. The rates for bridging finance are usually reflected in the length of the term. Typically, the shorter the term, the better the rate. As you can see, the use of bridging loans can be a highly effective tool, but one that requires the help of an expert to ensure you get the right product from the most appropriate lender. We are at the auction and happy to help and our office is
9
”
just around the corner. You can email us on info@stevemears.com or call 0117 9734300. Happy bidding.
Please remember YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE .
to contact Steve, email info@stevemears.com , telephone 0117 973 4300 or to find out more about Steve Mears Independent, visit www.stevemears.com
Made with FlippingBook Annual report