Bridging Finance for Land

In the landscape of land bridging loans, it’s important to note that there isn’t a universally accepted minimum loan size. However, the criteria for a land bridging loan can differ significantly among various lenders. Many leading lenders in the land bridging loan market typically start their loan offerings at £50,000 or more.

Diversity in Land Bridging Loan Criteria:

Variations Among Lenders for Land Bridging Loans: The land bridging loan sector is characterised by lender-specific terms, including differences in minimum loan sizes. These variations reflect the unique approaches and risk assessments undertaken by lenders in this field.

Market Norms in Land Bridging Loan Amounts: Prominent lenders in the land bridging loan sector often establish a base level for loan amounts, usually beginning at around £50,000. This benchmark forms a part of their strategic lending criteria.

Mortgage Lane’s Expertise in Land Bridging Loans:

Proficiency in Land Bridging Loan Requirements: Specialising in land bridging loans, Mortgage Lane provides crucial advice on the varied lender requirements, including their minimum loan sizes.

Tailored Land Bridging Loan Solutions: We dedicate ourselves to matching borrowers with land bridging loan options that optimally suit their financial needs and investment plans, taking into account the diverse minimum loan sizes available in the market.

Conclusion:

While there isn’t a uniform minimum loan size for land bridging loans across all lenders, comprehending the different thresholds established by various lenders is essential. Mortgage Lane is adept at guiding borrowers through these choices, ensuring they secure a land bridging loan that meets their unique investment goals and circumstances.

Serviced Interest

Definition: In a serviced interest arrangement, the borrower pays the interest monthly, similar to a standard mortgage.

Advantages: This option can be beneficial if the borrower has a regular income stream and prefers to manage their cash flow by paying interest as they go. It helps in maintaining the principal amount of the loan, as the borrower is actively paying off the interest.

Considerations: Borrowers need to ensure they have the necessary cash flow to make these monthly interest payments. It’s essential to plan for these expenses to avoid financial strain.

Deducted (Retained) Interest:

Definition: In deducted or retained interest loans, the interest for the loan term is calculated upfront and deducted from the initial loan amount provided to the borrower.

Advantages: This approach is useful for borrowers who may not have a regular income stream during the term of the bridging loan, such as property developers awaiting sale or refinancing of a project. It eliminates the need for monthly interest payments, as the interest is already accounted for.

Considerations: Since the interest is deducted at the beginning, the initial cash received by the borrower is less than the total loan amount. Borrowers should plan accordingly, as they will have less capital available upfront for their project or investment.

Both options have their specific uses depending on the borrower’s financial situation, cash flow, and strategy for the loan. It’s crucial for borrowers to understand these differences and choose the option that best aligns with their financial plan and the intended use of the land bridging loan.

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At Mortgage Lane, we are experts in providing land bridging loans for development projects. If your project is fully approved with planning permission, we can offer a development loan up to 75% LTGDV which can be arranged after the bridging completes if you’ve been waiting on the planning consent (Loan to Gross Development Value). Let’s break down these key components for a clearer understanding:

Loan to Gross Development Value (LTGDV) with Land Bridging Loan:

LTGDV Explained: This is a critical metric in property development finance, especially relevant to land bridging loans. It determines the maximum loan amount we can provide, based on a percentage of the Gross Development Value of your project at completion.

Gross Development Value (GDV): The GDV represents the projected market value of your property or development post-completion of construction or renovation works.

75% LTGDV: In terms of a land bridging loan, we can lend up to 75% of your project’s estimated completed value. For example, if your development’s GDV is around £1,000,000, you could be eligible for a land bridging loan of up to £750,000 from Mortgage Lane.

The Role of Planning Permission in Securing a Land Bridging Loan:

With Planning Permission: Full planning permission indicates that your development project has been authorised by the local planning authority. This reduces risk for the lender, making it easier to secure a land bridging loan, as it assures that your project is legally compliant and ready to proceed.

Without Planning Permission: Lacking planning permission makes obtaining a land bridging loan more challenging. Unapproved land use or development plans increase lender risks. Without official sanction, the potential value and viability of the development are unpredictable, complicating our ability to finance it.

In conclusion, full planning permission is essential for securing a land bridging loan for your development finance. It legalises your project and clarifies the lending process, allowing us at Mortgage Lane to confidently invest in your development’s future value. Absence of planning permission, conversely, substantially restricts your financing options due to heightened risks.

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Remortgage Options Inquiry: If you’re looking for a refurbishment loan and have a history of adverse credit, lenders may inquire about your options for remortgaging. This is part of their assessment to understand your exit strategy for the loan, especially if the plan involves refinancing the property after refurbishment.

In summary, land bridging loans offer a unique opportunity for individuals with diverse financial backgrounds. The non-status approach of these lenders allows for a broader range of applicants to access financing, especially if they bring a strong deal and a solid exit strategy to the table. At Mortgage Lane, we specialise in connecting applicants, regardless of their credit history, with suitable land bridging loan options that align with their property goals.

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Yes, first-time buyers can indeed access land bridging loans. In the land bridging loan market, lenders often adopt a non-status approach, which means they focus more on the details and potential of the deal itself rather than the applicant’s credit history or status.

Key Points for First-Time Buyers Considering Land Bridging Loans:

Non-Status Lending Approach: This is particularly beneficial for first-time buyers who may not have an extensive credit history or previous property experience. Lenders evaluate the loan application based on the merits of the property deal and the feasibility of the exit strategy, rather than solely on the borrower’s financial history.

Deal and Exit Strategy Emphasis: For first-time buyers, it’s crucial to present a strong case regarding the potential of the land or property and a clear, viable plan for how the loan will be repaid, such as through the sale of the property or obtaining a long-term mortgage.

Opportunity for Diverse Financial Backgrounds: This approach opens opportunities for first-time buyers who might not qualify for traditional property financing due to lack of experience or credit issues. It allows them to enter the property market through alternative financing routes.

Advice and Support: As with any financial commitment, especially for first-time buyers, it’s important to seek advice and fully understand the terms of the land bridging loan. Expert guidance can help navigate the process and ensure that the loan aligns with your property goals and financial situation.

At Mortgage Lane, we support first-time buyers in exploring their options for land bridging loans, guiding them through the intricacies of the application process and helping them secure financing that suits their project and financial circumstances.

Yes. Many of our clients use Land Bridging Loans to purchase land from auction. It is good to instruct your broker immediately so you can establish which solicitor you may be dealing with. It is important to note that most short term lenders offering Auction Loans will have a closed legal panel and therefore your chosen solicitor may not be able to act.

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We assist our clients with Land Bridging loans in England, Wales, Scotland, and Northern Ireland.

While experience can be an advantage, most lenders in the land bridging loan market do not necessarily require borrowers to have prior experience when applying for a loan. This aspect is particularly relevant for those seeking financing for auction purchases or property development.

For land bridging loans, the emphasis during the underwriting process is less on the borrower’s past experience and more on the feasibility of the loan and the exit strategy. The borrower’s experience may become more pertinent when considering the exit plan from the land bridging loan, such as obtaining a development loan or remortgaging.

Key Points:

Flexibility in Experience Requirements: Land bridging loan lenders typically offer more flexibility regarding the borrower’s experience level. They focus on the present transaction rather than the borrower’s history in property dealings.

Importance of Exit Strategy: The borrower’s experience might be evaluated in the context of their exit strategy from the land bridging loan. For instance, if the exit involves securing a development loan or remortgaging, the lender may assess the borrower’s ability and experience to successfully achieve this.

Case-by-Case Assessment: Each application for a land bridging loan is considered on its own merits. Lenders will look at the specifics of the deal, the property in question, and the proposed exit strategy to make their lending decision.

At Mortgage Lane, we understand that each borrower’s situation is unique. We work closely with our clients to navigate the land bridging loan process, offering guidance and support regardless of their level of experience in property development or investment.

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When considering land bridging loans, particularly for auction purchases, it’s crucial to be aware that these loans are typically not protected by the Financial Services Compensation Scheme (FSCS). This lack of coverage applies unless the borrower intends to reside in the property. Therefore, borrowers using land bridging loans for investment purposes should be especially diligent in selecting a reputable lender.

Key Considerations for Land Bridging Loans:

FSCS Coverage: Land bridging loans used for investment, as opposed to residential purposes, generally do not fall under the protection of the FSCS. This means that the safety net provided by the FSCS for other financial products may not be available.

Reputable Lenders: Due to the absence of FSCS coverage, the importance of working with a credible and trustworthy lender cannot be overstated. It’s essential to ensure that the lender has a solid track record and a strong reputation in the market.

Due Diligence: Borrowers should conduct thorough research and due diligence when selecting a lender for a land bridging loan. This includes checking the lender’s history, reading reviews, and possibly seeking recommendations from trusted financial advisors.

At Mortgage Lane, we prioritise the safety and satisfaction of our clients. We guide our borrowers in choosing reputable lenders for land bridging loans, providing them with the necessary information and support to make informed decisions. This approach is especially important in the auction loan market, where the right lender choice can significantly impact the success of your investment.

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When exploring the options for a land bridging loan, it’s important to recognise that there is generally no fixed minimum property value that applies universally. However, this criterion can vary considerably among different lenders in the land bridging loan market. Many of the foremost lenders in this area usually set a minimum property value threshold of £75,000 or higher.

Understanding Land Bridging Loan Requirements Across Different Lenders:

Variability in Lender Terms for Land Bridging Loans: The land bridging loan sector exhibits a wide range of criteria among lenders, including different minimum property values for considering loan applications.

Trends in Land Bridging Loan Market: Leading lenders in the land bridging loan field often establish a baseline property value, typically starting at around £75,000, as a part of their risk management and loan feasibility evaluations.

Mortgage Lane’s Expertise in Land Bridging Loans:

Specialised Guidance in Land Bridging Loans: Mortgage Lane, with its expertise in the land bridging loan market, is skilled at advising clients on diverse lender requirements, including the aspect of minimum property values.

Customised Land Bridging Loan Options: Our focus is on connecting borrowers with land bridging loan solutions that best match their individual needs and the value of the property in question.

Conclusion:

Although there is no standard minimum property value for land bridging loans across all lenders, understanding the various thresholds set by different lenders is vital. Mortgage Lane’s proficiency enables borrowers to effectively navigate these differences, helping them secure a land bridging loan that fits their financial objectives and property investment strategies.

As Mortgage Lane, a specialist in property financing solutions, I can provide a clear understanding of what a land bridging loan is:

A land bridging loan is a type of short-term financing that is particularly useful in property transactions. It’s designed to “bridge” the gap between a financial need and its future funding. This type of loan is especially beneficial in scenarios where quick funding is required for purchasing or developing land before longer-term financing can be secured or the property is sold.

Key Features of Land Bridging Loans:

Short-Term Nature: Typically, these loans are for a short duration, ranging from a few months up to a couple of years.

Speed of Funding: One of the most significant advantages is the speed at which funds can be made available, often much faster than traditional bank loans.

Secured Loans: These loans are secured against property or land, which means the borrower must have some form of real estate asset to offer as collateral.

Flexible Terms: Unlike traditional loans, land bridging loans offer more flexibility in terms of loan structure and repayment options.

Higher Interest Rates: Due to their short-term nature and higher risk, these loans generally carry higher interest rates compared to standard mortgages.

Property Development: Ideal for developers who need quick financing to start or complete a project.

Property Auctions: Useful for buyers who need immediate funds to complete a purchase at an auction.

Land Acquisition: Beneficial for those looking to quickly secure land for future development or investment.

At Mortgage Lane, we understand the nuances and urgency often associated with property and land transactions. We offer tailored advice and solutions for land bridging loans, ensuring our clients can secure the necessary funds quickly and efficiently, aligned with their specific financial and project needs.

For land bridging loans, it’s important to note that lenders in this sector often operate on a non-status basis, focusing more on the specifics of the deal and the exit strategy rather than the applicant’s credit status. Let’s delve into this further, including the implications for applicants with adverse credit.

Land Bridging Loan Lenders: Non-Status Approach

Non-Status Explained: In the context of land bridging loans, ‘non-status’ refers to the lender’s approach where the emphasis is less on the applicant’s credit history or financial status. Instead, the primary focus is on the value of the deal itself – the property or land involved – and the viability of the exit strategy, which is how the loan will be repaid, such as through the sale of the property or refinancing.

Deal and Exit Strategy Focus: Land bridging loan lenders are primarily interested in the potential of the land or property transaction and how the loan will be repaid. This approach is beneficial for borrowers who may not have a strong credit history but possess a promising property deal.

Applicants with Adverse Credit

Adverse Credit Considerations: Similar to some mortgage lenders, land bridging loan lenders can accommodate applicants with adverse credit histories. This includes past missed payments, County Court Judgments (CCJs), defaults, or even an Individual Voluntary Arrangement (IVA).

Post-Bankruptcy Options: If you have been discharged from bankruptcy, your options with land bridging loan lenders tend to improve over time. Generally, the prospects are better after 3 years and continue to improve after 6 years, as this distance from bankruptcy indicates reduced risk to the lender.

Specialist lenders in the land bridging loan sector frequently operate with a closed legal panel. This means they specify which solicitors are authorised to act on their behalf. When obtaining a land bridging loan, you will typically select from a list of solicitors who are approved to represent the lender and, in some cases, you as well.

Key Aspects of Legal Representation in Land Bridging Loans:

Joint Representation: Often, the lenders offering land bridging loans allow for joint representation. This arrangement means that a solicitor from the lender’s closed panel can also represent your interests. This can streamline the legal process and potentially reduce legal costs.

Sole Representation: In contrast, some land bridging loan lenders prefer sole representation, where their chosen solicitor represents only their interests. In such scenarios, you have the option to engage your own solicitor, subject to certain eligibility criteria. This is particularly common when there are specific complexities or higher risks involved in the loan.

Legal Fees Consideration: It’s important to be aware that with sole representation, you will be responsible for two sets of legal fees – one for your solicitor and another for the lender’s solicitor. This can significantly impact the overall cost of obtaining a land bridging loan.

Understanding the implications of the closed legal panel system and the type of legal representation required is crucial when pursuing a land bridging loan. At Mortgage Lane, we advise our clients on these aspects to ensure they make informed decisions that align with their financial and legal circumstances in securing a land bridging loan.

No, for a land bridging loan, your income will be considered differently compared to traditional loans. While having a reliable income source is beneficial, it’s important to note that land bridging loan lenders typically adopt a non-status approach. This means they focus more on the deal’s merits and the exit strategy rather than the borrower’s income or credit history.

However, if your planned exit strategy from the land bridging loan involves remortgaging, lenders will be interested in ensuring that you have sufficient income to transition successfully onto a mortgage. This is because the ability to secure a mortgage for the exit strategy directly impacts the feasibility and risk assessment of the land bridging loan.

Key Points for Land Bridging Loans:

Non-Status Lending Focus: Lenders are more concerned with the value of the land or property and the viability of your exit plan. This could involve selling the property or refinancing, and less emphasis is placed on your current income or credit status.

Importance of a Solid Exit Strategy: If remortgaging is your intended exit strategy, lenders will assess your income to ensure that you can obtain a mortgage in the future. This is a crucial part of the risk assessment for a land bridging loan.

Income Considerations for Remortgaging: While non-status lenders may not heavily weigh your income for the initial loan approval, it becomes significant when your exit strategy involves transitioning to a traditional mortgage.

At Mortgage Lane, we understand the nuances of land bridging loans and the importance of a well-planned exit strategy, particularly when it involves remortgaging. We guide our clients through the process, ensuring they have a feasible plan in place to move from a land bridging loan to a long-term financing solution.

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We arrange cost-effective Land Bridging loans for:

• Individuals
• Special Purchase Vehicles/Limited Companies
• Limited Liability Partnerships (LLP)
• Trading companies
• Charities
• On/Offshore Trusts

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A land bridging loan, known for its short-term nature, differs from a traditional mortgage in several ways, including how interest is charged. In a land bridging loan, interest is typically charged on a monthly basis, unlike the annual interest charge commonly found in mortgages.

Depending on your eligibility, you may have the option to repay this interest monthly. However, if you don’t meet the criteria for monthly repayments, the interest on your land bridging loan might be calculated and deducted from the total loan amount at the outset.

An important feature to note is that if the interest is deducted upfront and you manage to exit the land bridging loan earlier than anticipated, you may be entitled to a refund for the portion of the interest that was not utilised.

Key Points:

Monthly Interest Charges: Land bridging loans generally charge interest each month, offering a different financial structure compared to annual mortgage interest rates.

Repayment Flexibility: You might have the option to pay the interest monthly if you’re eligible; otherwise, the interest will be deducted from the initial loan amount.

Interest Refund on Early Exit: Should you exit the land bridging loan before the term ends and if the interest was deducted at the beginning, you could receive a refund for the unused interest.

This structure underscores the flexibility and adaptability of land bridging loans, making them a suitable option for various short-term financing needs. At Mortgage Lane, we ensure our clients are well-informed about these aspects of land bridging loans, helping them make decisions that best suit their financial situation.

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We are proud to share that we’ve successfully arranged a land bridging loan in as little as 4 days. The key factor enabling such rapid completion is the strength of the exit strategy, a crucial element in land bridging loan applications.

For a land bridging loan to be processed quickly, a clear and strong exit plan is essential. This can include:

Sale: The profitability of the deal and the demand for the sale are critical. These factors are usually assessed by a valuer to determine the potential success of the exit strategy.

Remortgage: If remortgaging is the chosen exit strategy, the underwriting process will be more thorough. Factors like credit status, income, experience, stress testing, and an asset and liability review will be taken into account.

The speed of a land bridging loan application also hinges on the legal aspects:

Legal Considerations: The legal process is vital in determining the timeline for arranging a land bridging loan. If you’re aiming for a swift completion, it’s important to work with a broker who can guide you to a lender that doesn’t require extensive legal searches.

Indemnity Policies vs. Legal Searches: Some lenders are willing to accept an indemnity policy instead of conducting full legal searches. This approach can significantly expedite the loan arrangement process. Legal searches can take up to 6 weeks in some cases, which might not be feasible for purchases with a 28-day completion deadline, such as auction buys.

At Mortgage Lane, we understand the importance of a fast turnaround in land bridging loans, especially for auction purchases. We focus on connecting clients with lenders who offer efficient processing and are flexible with legal requirements, ensuring that you can complete your transaction within your desired timeframe.