Can I Get a Self-build Bridging Loan?
Building your own home from the ground up is a dream of many. If you are planning to go for a self-build project, there are two ways you can use it. The first is DIY, in which you must do most of the work yourself. The second option is hiring those who can do all the work on your behalf. Either way, you are not able to get a loan from banks, so it is worth considering a self-build bridging loan.
It is a specialist bridging loan taken out on a property you are building and thinking of occupying yourself. It provides you with funds to start building a property and achieve your goals. You may get this type of loan from a number of lenders, and p2p lending platforms also offer these loans to attract more customers. Bridging lenders offer more flexibility and quick access to funds.
If you are taking out a self-build bridging loan for the first time and need to learn more about it, this guide will help you get all the information you need.
Self-build Bridging Loan
A self-build bridging loan is a short-term funding solution used to fund the purchase and construction of a property. In the past, building a house or workplace was considered a privilege for wealthy people, but thanks to the self-build bridging finance that provides you quick funding to build your dream home.
Unlike mortgages, bridging loans offers flexibility when it comes to self-build projects. Lenders may provide funding as a lump sum or in stages to meet the needs of borrowers. In addition, there is no periodic inspection, which makes bridging finance a popular way to fund self-build projects.
This type of loan is taken out in situations when the mortgage is not an option, such as when purchasing a property at auction. These loans can be used to fund commercial or residential projects and are secured against the property you purchase. The lending criteria can be different for different lenders, and certain factors can affect your ability to take out a loan. Therefore, we suggest you research and understand everything before taking out a loan.
Types Of Self-Build Bridging Loan
You may find a number of self-build bridging finance depending on the type of the project. Self-build projects can be of any type, from constructing an eco-friendly lounge to a multi-generational castle. Some people do all the work themselves, while others hire contractors for some parts of the project.
The following are two common types of self-build bridging loans:
Building A New Property
It is the most common and ambitious type of self-build project, and it needs a huge amount of money along with a significant amount of time and effort. However, it is also satisfying because it allows you to build a perfect home from scratch.
Renovation Or Extension Of Property
If you are not going to build a property from scratch and are thinking of renovating or expanding a property instead, self-build bridging finance will help you in such projects. It may include adding a new bathroom or kitchen and changing the designs of windows or doors.
You can renovate a property to increase its value before the sale or to improve your living style.
Who Can Take Out Self-build Bridging Finance?
Bridging financing is usually available for property developers and investors who are in need of quick funding over a short period.
The eligibility criterion that most lenders take into account while assessing your application is your ability to make repayments on time. The loan terms range between 12 to 24 months.
If you want to apply for a self-build bridging loan, you can apply through a broker, p2p lending platform or direct bridging lenders. If you have little knowledge about this short-term funding, it is better to apply through a broker. Brokers have access to more lenders and help you find the best deal.
If you want to get quick approval, make sure that you have a viable exit strategy. Always remember, the stronger the exit strategy, the more lenders are likely to accept your
You must have a viable exit strategy to get quick approval and suitable interest rates. The stronger the exit strategy, the more lenders are likely to accept your application. In addition, it helps you in getting more suitable interest rates.
Bridging lenders also offer loans to individuals with bad credit scores, and also there is no need to provide any proof of income. You can easily take out self-build bridging financing if you have a valuable property and a strong exit strategy.
How Much Can You Borrow With a Self-Build Bridging Loan?
The cost of a self-build project is usually high. It can be anything and ranges between £250,000 and £500,000. You can take an amount according to the value of your property. Different lenders may have different lending criteria, and the amount you can borrow also depends on different factors such as the size and complexity of your build, the location of the plot and the materials you are going to use.
Which Is Better: A Mortgage Or Self Build Bridging Finance?
Self-build bridging loans UK and mortgages both have their own advantages and disadvantages, and which one is better for you depends on your circumstances.
Here is the basic difference in these finding options:
Self-build mortgages have strict eligibility criteria, and you have to put in a large initial deposit. Mortgage lenders monitor build schedules and pay funds in stages. However, the interest rates of mortgage loans are lower than those of bridging loans.
In contrast, self-build bridging finance comes with flexible and easy-to-meet eligibility criteria and needs small initial deposits. Bridging lenders provide all the amount as a lump sum, but you should keep in mind that the interest rate on bridging loans is always high.
We hope that now you can easily understand the difference and choose the right funding option according to your needs. \
Conclusion
A self-build bridging loan is a beneficial and suitable option for those who need funding to build a property from scratch or renovate or expand a property. Although many other self-build options exist, bridging lenders offer more flexibility and ease than the others. That is why more and more people are choosing bridging loans. When choosing a funding option or a lender, you should always research and make price comparisons.
Comments
Post a Comment