Financing Property Development With Bridging Loans

March 1, 2021
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Securing 100% of your development costs through a bridging loan is difficult but not impossible. If you’re looking to secure 100% of the build costs from day one, we can help. With Niche Mortgage Info, you can access:

  • A free quote
  • Find auction, bridging and development finance in the same place
  • Experienced brokers
  • Hand-picked panel of development finance lenders
  • Loans ranging from £50,000 to £20,000,000
  • Residential, buy to let and commercial financing available
  • First-time buyer auction financing
  • Flipping financing for “light” renovations
  • Bridge-to-let products designed for professional landlords
  • Complicated income structures considered
  • Lending on the end value

The world of property development finance is very complex and you might find that you have to raise the funds through multiple sources. You’ll also come up against confusing phrases such as “based on a 90-day valuation” or “lend against open market value”. The best way to navigate this complex field is by working with a specialist broker.

Lenders are known to set strict lending criteria and each one will have its own hoops to jump through. You might only be offered 65-70% of the potential value, which could leave you short. We can help you to approach the lenders most likely to connect with your vision.

How can I increase borrowing to develop a plot?

Often you need to be creative in your approach. This could mean raising funds across multiple sources to help raise enough capital to complete the project. Many traditional finance streams fall short because they simply cannot advance enough.

If you have purchased a plot for £100,000 and have planning permission to build 5 residential homes, you could be looking at a final value of over £850,000. When the cost of building the homes is £400,000, you’re looking to potentially pocket £350,000 in profit. But this profit will only be realised if you have access to £400,000.

A traditional mortgage and bridging finance would only lend a fraction of this value and would pay out in stages. This type of finance would also only consider the current value of the project.

So to return to the original example, if your plot and foundations are worth £150,000 and a lender agrees to advance 70% of this, you would only secure £105,000. This would not cover the costs of building work, so you would need to secure the other £295,000 elsewhere.

Our solution to an all-too-common problem

If you are struggling to secure finance, we recommend speaking to Niche Mortgage Info. We can connect you with lenders in the property development finance sector. These lenders can provide funding that will cover 100% of the building costs from day one. No more payouts in stages or current state valuations. Instead, you can fully finance your build and take much of the stress out of the process.

The fine print

This type of funding is only available for up to 6 hours or 4 flats per project. These are also typically restricted to London, the South East, West Midlands and South Wales. Each case will be taken on its own merit, but you can expect rates around 1.5% and a lender will typically charge 2% of the loan advance. You will also be required to pay legal and valuation fees.

Get in touch with Niche Mortgage Info to find out more about this type of property development finance.

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Niche Mortgage Info is a guidance website and introducer and is not regulated by the FCA. All of the advisers we partner with work only for firms who are authorised and regulated by the FCA and specialise in a number of different fields. They will offer any advice specific to you and your needs. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice.

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