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residential property bridging loan

Residential Property Bridging Loans within Your Reach

The mortgage industry in the UK has been showing the signs of recovery post the 2008 downturn. However, getting a loan to finance the purchase of residential properties is still not as straightforward as one would wish it to be.

That is why, more and more buyers, developers and investors have started falling back on bridging loans. These interest-only loans can help you seamlessly make a transition to a new residential property or fund your ambitious residential buy-to-let projects.

What is a Residential Property Bridging Loan?

A residential property bridging loan is a short-term loan that is used to finance the projects involving residential or semi-commercial properties.

Such bridging loans are typically termed over 6-12 months, allowing the borrower enough time to arrange for the repayment. Many lenders also offer bridging finance packages that are interest-only. An interest-only bridging loan requires the borrower to pay the regular interest over the tenure of the loan, while the principal loan amount is written off as a part of a new, short-term mortgage.

How a Residential Property Bridging Loan Can Help Your Project

There are many possible ways in which a residential property bridging loan (‘residential bridge’) can help you. As a borrower, you can choose to finance your residential project in part or in full with such bridging loans. This gives you the much-needed flexibility to choose the best interest rates, loan terms and repayment schedule.

Here are some common scenarios in which a residential bridge can prove to be immensely useful.

Residential Property Purchase

Buying a residential property can be a tough ask, if you don’t have access to another mortgage. In such cases, a residential property bridging loan can help you bridge the shortfall without much hassle. A residential bridge for property acquisition is typically only used to support existing mortgages.

Residential Property Development

If you are a developer, a residential property bridging loan opens many avenues for you. For expensive projects like developing a residential property from the ground up, a residential bridge can help you cover the unforeseen development costs. Please note that lenders usually shy away from funding larger residential projects in full. So, for residential property development projects like buy-to-let or HMOs, a bridging loan is best used as an auxiliary mode of financing, over and above the development mortgage or the HMO mortgage.

Residential Property Refurbishment

This is, by far, the most common reason for borrowers to use residential bridges. For any residential property, from a semi-commercial rental to a fully-fledged lodging house, refurbishments costs can run into thousands of pounds. These refurbishments can be of two types: voluntary and mandatory.

Value addition is usually the motive behind voluntary refurbishments. For example, renovating the interior design or installing newer appliances.
Mandatory refurbishments are a part of compliance with ever-changing planning requirements. For example, bringing the evacuation infrastructure up to the code.

Property owners or developers can choose to take a bridging loan to bear the expenses of such major or minor renovation projects.

Residential Property Refinancing

Although uncommon, this type of borrowing is a good way to balance the existing mortgage. If you wish to refinance your existing residential properties with a smaller mortgage with lower interest rate, you can get a bridging loan to cover for the drop in the mortgage amount. Developers usually use this strategy to close out expensive mortgages when cheaper rates become available.

How Does Residential Bridging Finance Work?

Residential bridging finance works primarily around the future availability of funds. The risks of non-payment involved with a residential property are fewer, if the property is up to the code. Hence, it’s easier to arrange for bridging loans for residential properties.
While robust mortgages like development mortgages or HMO mortgages take months to appear in your account, a residential bridge can be made available in just a few days, upon successful completion of the paperwork.

Your One Stop Solution to Residential Property Bridging Finance

Whether you are a property buyer, investor or developer, approaching a lender yourself for a residential bridge can be a tiring experience. Despite the efforts, the likelihood of securing a fair deal still stays low in such cases.

But things don’t have to always be so difficult. Commercial Finance Network, being a leading whole of market broker in the UK, collects the most affordable residential bridging finance offers from the best lenders on your behalf.

All you have to do is get in touch with us here to discuss your requirements with one of our experts today.