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By Pete Mugleston | Mortgage Advisor

Pete has been a mortgage advisor for over 10 years, and is regularly cited in both trade and national press.

Updated: 11th January 2021*

There are many different ways you can finance a property development project, and below Craig has asked about using a regulated bridging loan if he has no experience in property. As you can see from my answer, it’s important to have a good exit strategy, which i discuss in more detail.


Question

Hi Pete,

I’m hoping to buy a derelict building in my local area, do it up and sell it off. The property is currently classed as ‘uninhabitable’ but with a relatively small amount of development work, it could be brought back into residential use.

The amount of work needed does not justify a full self-build mortgage, so I feel that a regulated bridging loan is the way to go. My plan is to repay the debt with some of the proceeds when I sell the property down the line. I’m planning to use a local firm to carry out the renovations themselves, but I have no experience in this kind of project myself.

Are there any bridging loan lenders who will approve an application like this, or is my lack of experience in residential property development likely to hold me back?

Thanks,

Craig, Salford 

Answer

Hi Craig, 

Thanks for getting in touch. I’d be delighted to help you out and I’ve got good news for you: having no experience in residential property development isn’t necessarily going to be a deal-breaker here. All bridging loan applications are weighed and measured on the strength of the exit strategy, and if yours is strong, there could be a lender out there for you.

Although some bridging finance providers might steer clear of this project because of your inexperience, others might be more interested in the experience of the building firm you’re using. If their credentials check out, the lender might be convinced that your plans are achievable.

Moreover, the sellability of the property you want to develop is likely to be a more critical factor here than your track record in the industry. If the lender thinks the property will raise the required amount when the works are completed, this will dramatically increase your chances of approval.

In any case, I would suggest speaking to a specialist bridging finance broker. They have whole-of-market access and can match you with the lender who is best placed to offer finance to a customer with no experience in property development.

Thanks,

Pete


You can read more questions and answers about regulated bridging loans here:

Updated: 11th January 2021
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FCA disclaimer

*Based on our research, the content contained in this article is accurate as of most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs. Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.