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Can you get 100% development finance?

Can you get 100% development finance?

Yes, if you are looking to raise funds to complete a development project, it may be possible to secure 100% of the cost of the build through development finance.

Also known as joint venture (JV) development finance, this type of funding allows you to raise the capital that you need without having to use your own money, as the lender will cover all of the costs, including the site acquisition and any build costs. But for this, the lender will charge an interest rate for providing the funds and the profits will be split, once the project is complete and sold.

The Loan Partnership new build property

Important to know for development finance

The application process for applying for 100% development finance can be complex and obviously there are lots of factors for the lenders to consider, given the additional lending risk. Therefore, 100% development finance is typically only available to seasoned property developers, who can prove that they have completed similar projects before. Experience really is key here and expert guidance when it comes to financing the development can make or break the project.

Additionally, full planning permission will need to have been approved for the lender to consider the application and a personal guarantee from the borrower may need to be provided. This is an agreement between the borrower and lender that should the project experience issues and for whatever reason not complete, the lender will be able to recover a small percentage of the debt directly from the borrower. It is extremely rare to happen but this is why having an experienced broker on your side can help when negotiating the terms of the loan and providing the documentation needed to get the finance approved.

Each lender will have their own lending criteria but most will require documentation such as a schedule of works, a schedule of costs, a copy of the full planning permission approval and evidence of your previous development work. Our team can help you collate this and answer any questions to help reduce delays.

With regards to the interest charged by the lender, this is typically rolled up into the finance so there are no monthly payments during the loan term and the interest is simply paid when the project is completed.

Given the complexities of the application and the project, development finance lenders will typically only consider 100% development loans for projects with a gross development value (GDV) in excess of £1,000,000 with enough of a profit margin to make it worthwhile.

How long it will take to get the development loan will depend on a range of factors but generally it can be obtained in roughly 12 weeks from enquiry to completion. Ways to reduce delays include appointing an experienced solicitor that understands development ownership structures as well as using an experienced development finance broker that can select a suitable lender,  support the application throughout the process and ensure that delays are kept to a minimum.

Understandably a more difficult type of finance to secure, however with the right advice and application support 100% development finance can be obtained with competitive rates and flexible terms to suit the project.

Having supported a wide range of UK development projects over the last decade, the TLP team has a wealth of experience when it comes to dealing with joint venture development finance and can help you navigate the complex lending criteria to get the 100% finance for your project.

Talk to us on 01923 250090 to get started or apply online and one of our development brokers will be in touch shortly. 

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How does a bridging loan work?

How does a bridging loan work?

So, you’ve heard of bridging finance but want to know more about how it all works. This quick-fire guide will explain what you should expect when getting a bridging loan, what interest rates are available and how long it should take.

What is a bridging loan?

Simply put, a bridging loan is a type of short term finance that can provide you with extra cash quickly and essentially ‘bridge the gap’ in your finances.

Close-up of front door handle

Secured against your property, a bridging loan is typically used for scenarios with tight deadlines such as purchasing a property at auction, having additional funds to purchase an in-demand property while you wait for your current one to sell or to even cover the costs of refurbishing your property to help to attract a buyer.

For whatever reason you may be considering bridging finance, with the right mortgage advice it can be quick to secure and provide the short term cash injection you need before a more permanent form of finance can be arranged, such as a mortgage.

How do you get a bridging loan?

One of the easiest ways to get a bridging loan is to first discuss your options with an experienced bridging broker, such as one of our bridging specialists at TLP. We will ask a few questions to understand your situation and what you are looking to borrow.

We will then compare a wide range of loan options from our panel of specialist bridging lenders, including lenders such as United Trust Bank, Shawbrook and West One Loans. With over a decade of experience in the bridging finance sector, our team has in-depth market insights so will be able to easily navigate the latest lending criteria to identify suitable solutions to match all your needs. Using our industry relationships we may even contact the lenders directly to discuss your potential application, to ensure they are the right lender for you.

You’ll receive a free no-obligation quote with a full breakdown of all our recommendations. Once you are fully happy with the rates and terms, we’ll help manage the application at each stage, will deal with all the boring paperwork and will strive to mitigate any unnecessary delays so that your application is approved as fast as possible. From enquiry to completion, we can typically get your bridging loan approved and the funds released within 5 – 14 days, depending on your unique circumstances and the lender’s requirements. In some cases, it can be arranged quicker or in more complex applications, it can take slightly more.

A bridging loan is usually secured over a period of 12 months, but there are lenders who will provide more flexible terms from 1 – 36 months. The broker can discuss with you all of the options available for you as getting the right length of term can be pivotal to the success of the loan.

What are the interest rates for a bridge loan?

Bridging finance interest rates can vary on a daily basis but are typically between 0.5% and 2% per month, depending on the lender that you choose.

A bridging loan can be more expensive than other types of finance available but most lenders will only charge interest on the months that your loan is outstanding. Therefore if you secure a loan to purchase a property while you try to sell your current one, if the loan is 12 months but you manage to sell the property in six, you will only pay interest on the loan over the six months, making it a considerably cheaper form of finance than first expected.

There is also usually no early repayment charges (ERCs) with a bridging loan, so you will not be penalised if you repay the loan early. It is important to note that each lender is different so it is vital that you check the full terms of your bridging loan before applying and this is something that your broker can help check for you.

Do you pay monthly payments on a bridging loan?

No, typically with a bridging loan there are no monthly repayments during the loan term, the finance is simply repaid at the end of the loan.

For example, if you have used the bridging loan to purchase a buy to let at auction with the plan to renovate the property and then sell on, you may not have to make any repayments during the renovation work but when the property is sold on, the loan and interest will be repaid then.

Whether or not there are any monthly costs for you to pay will depend on which lender you choose, and your broker will be able to discuss this with you to ensure the deal you are considering is suitable for your ongoing plans.

What happens at the end of the bridging loan?

If you reach the end of the bridging loan, there are few things that could happen:

  • You have sold the property ahead of the end of your term and you are able to repay the loan in one lump sum and if needed you are now able to refinance the property onto a long term finance such as a residential or buy to let mortgage.
  • You haven’t been able to sell the original property or there have been delays to your project. In this scenario we recommend that you firstly speak to your broker ahead of time as we will be able to review options for you.

If speed is the priority, a bridging loan can provide a very fast form of finance and with a range of lenders and products to choose from, it could be the right solution for your short term needs.

Talk to us on 01923 250090 or get started online here to start your application and discover if a bridging loan could work for you.

TLP Guides

Can you get a second charge mortgage with bad credit?

Can you get a second charge mortgage with bad credit?

In a nutshell…yes it can be possible to get a second charge mortgage even if you have a bad credit history or a currently low credit score. In many cases it actually may be easier to secure a second charge loan, compared to a traditional unsecured loan or a remortgage. This is because a second charge mortgage is secured against your property, reducing the risk for lenders and increasing the amount that you may be able to borrow, which is typically the amount of equity that you have in your property.
Homeowner searching second charge mortgages on The Loan Partnership

That being said, how much you can borrow, how much it will cost and what interest rates you will be fully eligible for will depend on your individual circumstances, which is where working with a broker experienced in securing second charge mortgages with adverse credit can really help.

During the application process you will need to provide evidence of your income and declare any CCJs, defaults, bad debt, missed payment, IVAs or bankruptcy, as understandably the lender will want to ensure you can afford the mortgage, on top of all your current expenses. Don’t worry though our team has years of experience of dealing with homeowners applying for a second charge with complex credit issues, and by providing this information upfront, we will be able to quickly pinpoint the lender that will accept your personal circumstances.

In many cases we have actually helped clients to consolidate their existing debt into one single monthly payment through a second charge mortgage, making it easier for them to pay back and creating a much more comfortable financial position for them long term.

After chatting with one of our advisors, if a second charge mortgage is right for you, we will proactively discuss your unique application with a range of bridging lenders to ensure that you fit their criteria before submitting the application.This reduces the risk of nasty surprises further down the line and will potentially save you both time and money from being turned down by the lender, something nobody wants.

Being able to use a second charge mortgage for a huge range of reasons means it can provide extra cash when you need it most, even if you have bad credit or a low credit rating.

To discuss your options and discover if you could be eligible for a second charge loan, talk to us on 01923 250090 or apply for more info here and the team will be in touch shortly.  missed payment

TLP Guides

How long does it take to get a bridging loan?

How long does it take to get a bridging loan?

As a short term loan, bridging finance is designed to provide fast funds when you need it most. 

It is true that it can be slightly more expensive than other types of finance but given its speed and the amounts you may be able to borrow, it can really be a lifeline when you are in urgent need of extra cash.

There are a multitude of scenarios when a bridging loan could be the right solution for you, such as you are purchasing a property at auction and you have 28 days to complete the purchase of the property, or you have found your new dream home but are struggling to sell your current property and don’t want to miss out. Well, with a bridging loan, you may be able to get the extra funds you need, within these tight deadlines.

Investor applying for a bridging loan on The Loan Partnership

How quickly can I get a bridging loan?

How long it will take to actually receive the funds will depend on various factors, such as the lender that you choose and the level of finance that you take. This is why using an experienced bridging broker can really help and reduce any unnecessary delays in the process.

To give you a ballpark figure though, a bridging loan can typically be arranged in anything from 5 – 14 days. Depending on your circumstances you may be able to obtain the funds even faster and in some more complex cases it may be longer. Generally speaking though you will typically receive an agreement in principle within 24 hours, then it will take one to two weeks to release the funds.

To give you a better idea, here’s how a bridging loan works. After a quick chat with one of our experienced bridging brokers to answer just a few questions on how much you are looking to borrow and your financial situation, we will get straight to work to find you a suitable deal to match your needs from our wide range of bridging lenders. We work closely with bridging lenders from across the market including Shawbrook, United Trust Bank and West One Loans to name just a few. We will compare hundreds of deals to pinpoint the most suitable options for you.

You’ll receive a free and absolutely no-obligation quote with a full breakdown of the latest rates available and any fees applicable. Should you have any questions, we’re here to help and once you are happy, we’ll help get your bridging loan application submitted to the lender to process.

Your dedicated broker will keep you up to date throughout the application process and will ensure you get to that all-important completion as quickly as possible. 

What factors can delay getting a bridging loan?

Like with all finance, when applying for a bridging loan you may need to provide some documentation to support your application and the lender will undertake various checks to assess the risk and ensure you will be able to repay the loan. How long this will take truly depends on the particular lender, as each has its own process and criteria to adhere to. This is why picking the right lender can be pivotal to obtaining the funds you need and why our market knowledge can help you avoid dead-ends or delays. 

In some cases a survey may be needed on your property as part of the lender’s underwriting process. This can add time to the application but we will work with both you and the lender to ensure that if needed, all unnecessary delays are avoided.

Like with a traditional mortgage, a solicitor will be needed to complete the legal paperwork. So by choosing a solicitor with experience of dealing with bridging finance applications can really save you time.

In a nutshell, if it is fast finance that you need, a bridging loan can be one of the quickest ways to secure funding and by using an experienced broker you can reduce days and potentially get the funds in just a couple of weeks. 

To discuss bridging finance options or start your application, chat to the TLP team today on 01923 250090 or apply online here

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The benefits of a second charge mortgage

The benefits of a second charge mortgage

So you are considering a second charge mortgage and are wondering whether it really is the right solution to get the additional funds you need.

We get that there are so many options and things to consider, we understand that you’ll want to look at it from all angles and ensure it is the right path for you. So here’s not only the benefits of choosing a second charge mortgage, as opposed to remortgaging or getting a personal loan, but also some things you should consider before applying.

Family in kitchen researching mortgages on The Loan Partnership

What is a second charge mortgage?

Essentially, a second charge mortgage is an additional loan, on top of your existing mortgage,  that is secured against your property (whether that is your residential home or even a buy-to-let).

The amount of loan that you can borrow with a second charge mortgage will depend on the equity that you have built up on the property, which is why it can sometimes be referred to as a ‘homeowner loan’. Put another way, you can work out the amount you may be able to borrow by deducting the outstanding balance on your original mortgage from the value of your property.

So what are the advantages of a second charge mortgage?

Lots of homeowners and landlords take out second charge mortgages for a plethora of reasons, and some of the benefits include:

  • If you would like to borrow some extra cash using your property but you already have a very affordable interest rate on your existing mortgage that you don’t want to lose, by taking out a second charge loan you can keep the original mortgage and only pay the new interest rate on the new loan. Comparing this, if you were to remortgage instead, it would mean you would have to pay the higher interest rate across the whole borrowing amount. 
  • On top of this, by taking a second mortgage, you may be able avoid paying early repayment charges (ERCs) on your current mortgage, potentially saving you thousands of pounds.
  • The process of securing a second charge mortgage can be much quicker and straightforward compared to the process of remortgaging your home, meaning you get the cash you need faster and easier.
  • As a second charge mortgage is secured against your property, you may be able to borrow more than you could with a traditional personal loan.
  • Additionally, if you are struggling to get a personal loan, due to complex income, bad credit or being self-employed for example, then a second charge mortgage may be easier to get as your property is used to secure the loan. It can provide a financial lifeline when looking to consolidate any existing debt or raise extra funds.
  • The repayment period can be longer compared to other finance options, making the payments more manageable. The total amount repayable overall will be higher but the longer the term, the lower the monthly payments. This makes it a great option for debt consolidation and large purchases.
  • Second charge mortgages can give you greater flexibility on what you use the loan for, for the most part, you can use the second charge mortgage for any legal purpose. Most commonly people use them to reduce monthly outgoings into a single more affordable payment, or to purchase large items like a new car or a new property. We’ve helped hundreds of homeowners to get the funds they needed in countless situations.

What should you consider before taking out a second charge mortgage?

Like with all loans, there are also some things you should consider before taking on any additional debt. When it comes to a second charge mortgage, you could know that:

  • You will need permission from your existing mortgage lender to secure the second charge mortgage.
  • Like with all mortgages, should you ever fail to meet the repayments on your second mortgage, your property will be at risk so you will need to ensure you can pay both mortgages back.

This is where we come in. Should you have any questions or queries of whether you can take out a second charge mortgage or if it is a suitable option for you and your family, we’re here to help. Our advisors are experts when it comes to second charge mortgages, and they can discuss all of the pros and cons, which mortgage lenders you should consider and exactly how much you can borrow on your property.

We’ll ask you a few questions to understand your full situation and then we can send you a free no obligation quote for you to consider and discuss with your family. We understand that taking out any loan needs to be the right decision, so we’ll help with any queries you may have to ensure you are fully happy with your new mortgage. 

To discover your options and discuss the latest rates available, talk to us on 01923 250090 or get in touch today to get started online

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How much deposit do you need for a commercial property mortgage?

How much deposit do you need for a commercial property mortgage?

The amount of deposit that you will need for a commercial mortgage will depend on a few factors such as the amount of borrowing you are looking to secure, the type of business and the lender you choose. Typically you can expect to need a deposit between 25% – 40%, but it could be higher or even lower if additional securities can be provided.

What factors could impact how much deposit you will need?

When calculating the affordability of a commercial mortgage, the lender will assess the strength of each application and will typically consider:

Modern commercial office building
  • The type of business that you have – for example companies such as restaurants or pubs may require a slightly bigger deposit compared to an office premise, due to the increased risk. 
  • Your industry experience – if you have a proven track record of working within that type of business this can help reduce the amount of deposit you will need.
  • Profitability – if the business is already trading with an accounting history this can help make the lender more comfortable with the lending. Alternatively if you can provide a comprehensive business plan with a clear strategy, this can massively support your application. 
  • Property type – the amount of deposit you will need will also depend on the type and construction of the property that you are looking to mortgage. For example, if the building is a non-standard construction, the lender may request a slightly higher deposit. 
  • The condition of the property – if the building will need significant renovation work to allow the business to trade, this can impact the risk and therefore the amount of deposit required. 
  • Loan-to-Value (LTV) – the lender will also take into consideration the amount that you are looking to borrow compared to the value of the property. 
  • Credit history – having a strong credit file can help support your application for a commercial mortgage and the amount of funding you are able to obtain. 

When enquiring for a commercial property mortgage, your dedicated broker will ask a few questions and take the time to understand your business, your plans moving forward and current financial situation in order to recommend the most suitable options for your particular circumstances.

With insights into the latest commercial finance criteria, they will be able to discuss what deposit you would need to provide to secure a commercial mortgage and which lenders could offer you affordable options with your preferred deposit in mind.

To get started you can talk to us by calling 01923 250090 or by getting in touch here to request a callback from one of our mortgage advisors.