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Incomplete Property Loan

Incomplete Property Loan

Found a property that you can purchase for a fraction of its potential value? Have you found a property that requires major modernisation but you cannot obtain mortgage finance due to its current incomplete and poor condition? Why miss out on a profitable transaction? Why not purchase and complete the renovations using bridging finance and then either refinance to a lower rate mortgage deal or sell the property at a profit once the work is complete?

Purchase of an incomplete/run down property using bridging finance

Example:

Our client purchased a partly renovated house without a kitchen and bathroom. After being refused mortgage finance from his bank, our client asked us to arrange a bridging loan to purchase the property. After renovation, the house could now qualify for a mortgage and our client did this to repay our bridge. This is just one example that a bridging loan could have been used for.

Why Use an Incomplete Property Loan?

Incomplete property loans represent an ideal solution where traditional mortgages and property loans are out of the question. Major banks and High Street lenders are generally unwilling to lend against properties not considered ‘mortgageable’ in the traditional sense. In which case, an incomplete property loan could be the best available option.

Specialist lenders can offer loans against properties that traditional banks consider unacceptable, such as:

  • Derelict properties
  • Properties without a working bathroom or kitchen
  • Buildings with severe structural problems
  • Homes that are considered uninhabitable
  • Properties with non-standard or unusual construction
  • Homes and commercial properties valued under £50,000
  • Properties with less than 80 years left on the lease

Where incomplete property loans are needed, lenders are just as interested in the borrower’s exit strategy as they are about the condition of the property itself. As with all mortgages and property loans, interest rates and overall borrowing costs differ significantly from one lender and product to the next.

It is therefore strongly advisable to work with an independent broker, in order to compare the market and find the best possible deal available.

Last Updated: Jan 24, 2020 @ 11:53 am
NACFB
UK Property Finance is Authorised by The Financial Conduct Authority (FCA)
Association of Bridging Professionals