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Bridging Loans for Unmortgageable Properties

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Bridging Loans for Unmortgageable Properties

To qualify for a standard mortgage, a property must be in a habitable condition and be constructed with standard materials. Anything else may be unmortgageable.

That’s not the end of the road though. 

Work with specialist lenders like GPS Financial and we could help you secure a competitive bridging loan for an unmortgageable property.

We can secure bridging finance for unmortgageable properties between £25,000 and £25 million for up to 12 months at very competitive rates.

You could use the money to:

  • Bring the property up to habitable condition
  • Refurbish or renovate a property so it qualifies for a standard mortgage
  • Develop a property to remove or replace non-standard building materials
  • Any property purchase where a traditional mortgage isn’t an option

There are a surprising number of reasons why a property might be unmortgageable. There are also many thousands of properties regarded as unmortgageable.

That shouldn’t mean you cannot invest or develop the property and bring it up to standard.

The list goes on. But so do the opportunities. That’s where GPS Financial comes in.

We work with some of the country’s best lenders willing to lend on unmortgageable properties and provide the best service, fast decisions, and competitive rates!

What are Bridging Loan?

Bridging loans are a type of short-term loan that can be used to bridge a financial gap between buying and selling property.

They are most commonly used by those looking to buy a property but are unable to do so due to not yet having sold their existing property.

Bridging loans are typically faster to arrange than a traditional mortgage and are often secured by the property you are intending to buy.

They can be used for a range of purposes, including buying a property at auction, renovating a property for resale or making it more attractive to lenders for a traditional mortgage, and even for buying unmortgageable properties.

However, it is worth noting that bridging loans are often more expensive than traditional mortgages, with higher interest rates and fees.

It is important to carefully consider whether using a bridging loan is the right financial decision for your individual circumstances. 

What makes a property unmortgageable?

There are a number of factors that can make a property unmortgageable, which essentially means that a lender will not be willing to lend money against it.

One of the most common reasons for this is if the property is derelict or in a significantly poor state of repair. 

In some cases, even if the property is in a good state of repair, it may still be considered unmortgageable if it has certain features or characteristics that lenders perceive as too high-risk, such as being located in a high-risk flood area or having a short lease.

A bridging loan for an unmortgageable property could help you purchase:

  • Buildings not currently fit for human habitation
  • Properties built from non-standard materials
  • A part commercial, part residential building
  • A derelict building or one that needs extensive renovation
  • HMOs or other multi-tenancy properties
  • Mixed-use properties

If you are struggling to find a mortgage lender willing to work with you, it may be worth seeking advice from a property finance broker who can help you navigate the process and find a loan that meets your needs. 

That’s where GPS Financial comes in.

We work with some of the country’s best lenders willing to lend on unmortgageable properties. 

How do Bridging Loans work?

Bridging loans are commonly used to facilitate buying a new property before the sale of an existing one is complete, but can be used when buying an unmortgageable property.

Bridging loans are typically secured against the property being purchased and the borrower is required to repay the loan when the property is sold or when longer-term finance such as a traditional mortgage is obtained.

These types of loans are often taken out by property developers who require funds quickly to complete a project, or by those who are buying at auction and need to complete within a tight timeframe.

Interest rates on bridging loans are typically higher than those of traditional mortgages and the amount borrowed is usually limited to a percentage of the property’s value.

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What are the pros and cons of a Bridging Loan?

The main advantage of a bridging loan is that it can provide quick access to capital, enabling buyers to secure finance for a property they might otherwise miss out on. 

Additionally, bridging loans are often more flexible than high street loans, with less restrictive lending criteria.

However, there are also some potential drawbacks to consider. Bridging loans can be more expensive than traditional loans due to their short-term nature, and the interest rates can be quite high.

There is a risk that the property may not sell as quickly as anticipated, leaving the borrower unable to repay the loan.

As with any form of lending, it’s important to carefully consider the terms and conditions of the loan before committing and to only borrow what can be realistically repaid. 

What is the cost of a Bridging Loan?

The cost of a bridging loan can vary depending on a range of factors such as the amount borrowed, the lender, and the length of the loan term.

Different brokers may also charge different fees for their services, so it is important to research and compare options. In general, interest rates on bridging loans are typically higher than those of traditional mortgages.

Some lenders may charge additional fees such as arrangement fees, exit fees, and valuation fees.

In general, lenders will offer a loan amount that is equivalent to a percentage of the property’s value, typically anywhere from 70-85%. 

This means that if a property’s value is appraised at £500,000, for example, a borrower could potentially secure a bridge loan for up to £425,000.

It is important to factor in all of these costs when considering a bridging loan as they can significantly impact the overall cost of the loan.

As with any financial decision, it is crucial to weigh up the benefits and drawbacks of a bridging loan against other financing options to determine what is most appropriate for your situation. 

What can I use a Bridge Loan for?

Bridging loans, also known as bridging finance, are short-term loans that are commonly used for a bridging loan is when a borrower needs to purchase a new property before selling their existing one, and needs to raise the necessary funds quickly.

Bridging loans can be used for a variety of different circumstances including:

Bridging finance can also be used to renovate a property for resale, as lenders recognize the potential increase in value that this can bring.

Property investors and developers may also use bridging loans to take advantage of investment opportunities that require quick access to funds.

These loans are typically repaid within 6 – 12 months and can provide a valuable lifeline for individuals and businesses that need to secure finance quickly for a short period of time. 

Why choose GPS Financial?

GPS Financial was founded in 2013 with the goal of helping navigate the difficulties associated with handling paperwork and incorrect information when trying to obtain a mortgage for your property.

We will take care of everything, so you can be confident we will find the most appropriate financing option for your needs. 

Based in Cardiff GPS Financial is an award-winning property finance specialist, taking home the award for Best Firm: Bridging & Commercial in 2022, selected by Dynamo for Intermediaries, one of the country’s foremost Mortgage Clubs.

The team at GPS Financial is a team of experienced finance brokers who have extensive knowledge of the industry. We have access to all the top lenders, guaranteeing you receive the best value and service.

Contact GPS Financal today for fast, no-obligation unmortgageable property finance. Fill out the form at the top of the page and one of our expert advisors will get back to you.

Why GPS Financial?

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