100% LTV Bridging Loans
Morgan Stewart talks all about the specialist subject of 100% Loan to Value Bridging Loans.
What is a 100% Loan to Value Bridging Loan and how do they work?
It’s 100% finance for your purchase. Bridging Loans work like any sort of finance, you borrow a set amount of money, usually up to 75% of the value of the house, but 100% Bridging Loans are available in certain circumstances.
If you’re a property trader active in the market, and you find a property which you can buy for a discount, there is usually a reason for that discount. This may be that the back garden is full of Japanese knotweed or there are issues with the land registry title of that property. It cannot, therefore, be sold to the public until that sort of issue is fixed. If you can get a big enough discount on that property from what the surveyor quotes that property is worth, then it’s possible to get a 100% funded bridging loan.
If you have additional security, for example, if you’re a portfolio landlord, you may leave an unencumbered property in your portfolio as a bridging facility, which means you can put that in as additional security to the lender. This can help you to move quickly and can be helpful when purchasing properties at auction.
Who is typically eligible for 100% Bridging Finance?
Property professionals, traders, developers and investors would all be eligible.
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How can I get a 100% Bridging Loan?
A broker like ourselves can help you with that. We’ve got relationships with lenders and know how the package deals work. As well as completing 100% Bridge Loan applications, we can help with the remortgage of properties onto a Buy to Let mortgage, once they have been refurbished, in order to pay off the original loan.
How much deposit do I need?
You don’t need to have a deposit, but there will need to be some sort of security in the background.
How can I better secure my chances of getting a 100% Bridging Loan?
If you’re a portfolio landlord with multiple properties, I’d encourage you to pay the debt down on at least one of your Interest-only mortgages and keep it relatively mortgage free, to use as security.
What are the benefits of a 100% Bridging Loan?
Obviously your project would be 100% funded, but you can also move very quickly. You can buy houses in a matter of days, as usually the legal work has already been done in the background by the lender.
As with all Bridging Finance, the interest, for the life of the loan, is deducted from the beginning of the loan. Even though you might get 75 % of the value of the property, what you actually get is around 65% due to the interest. This means you need to find some more money at the beginning, but if you have that additional security, or a big enough discount on the value within the property and a solicitor that understands Bridging Finance, you can move very quickly.