Type of Properties that Bridging Loans are used for
The type of property that the loan will be used to purchase or improve.
When applying for a bridging loan, it is essential to either know the type of property that the loan will be used for security. This is because the type of property influences the amount and terms of the loan.
The most common types of property that bridging loans are used to purchase are residential properties, such as houses, apartments, and bungalows. Residential properties tend to have the highest loan-to-value loans compared to other types of property, and the loan process is generally straightforward. However, the loan amount and repayment terms may vary depending on the local property market and the valuation report.
In addition, commercial and semi-commercial properties may also be purchased using a bridging loan. These type of property tends to be significantly more expensive than residential properties, and the loan process is more complicated. For instance, the lender may require an in-person survey completed by a RICS qualified surveyor and is less likely to accept an automated valuation.
There are also other types of property that may be purchased using a bridging loan such as vacant land or auction properties. Vacant land may qualify for a bridging loan if it is being purchased to be developed or improved. This could include land used for building a new property, or a plot of land used for agricultural purposes.
Auction properties may also qualify for auction finance, which is similar to a bridging loan. Auction properties often require additional due diligence on the part of the lender, as auction properties are typically sold ‘as is’ and without building inspections.
When applying for a bridging loan, it is important to make sure that the type of property being purchased is eligible for the loan. Lenders may require additional information and security to approve the loan depending on the type and purpose of the purchase, and this should be disclosed in the loan application.