Rural Bridging Loan
A BRIDGING LOAN FOR RURAL PROPERTIES OR LAND
Mortgage Lane are award winning finance brokers that specialise in bridging finance for rural properties and land. Some lenders avoid rural areas and sometimes that can be due to lack of comparable sales data which can increase lending risk with that uncertainty, this is usually the case in rural areas as there are generally less properties per ¼ mile, than in the city for example.
We work with specialist bridging lenders that are keen to provide bridging finance secured in rural areas. So whether you’re buying a farm, land, a light industrial unit or a listed cottage for your new home, we understand which lenders to approach to secure funding on these asset types.
RURAL BRIDGING LOAN CRITERIA
When we are using a bridging loan for rural properties, it is key to note the product criteria so you will know what to expect. Usually terms range from 1-24 months, therefore if you are looking to renovate or get a planning gain on a property it is always best to stretch the term as long as possible in case of any delays, especially if it doesn’t reduce your NET facility, which is the amount you will receive on completion.
Interest is usually serviced or deducted, having serviced payments should allow you to NET or receive more of the loan day 1; deducting it will mean that you won’t have to think about the loan within your monthly cash flow as they deduct it from the NET amount receivable. To be approved for serviced payments the lender would look to underwrite your disposable income to deem this affordable.
Property types
We assist borrowers on many types of rural properties such as:
- Cottages, Bungalows and Houses
- Farmhouses
- Farms
- Equestrian properties
- Solar farms
- Light Industrial
- Bed and Breakfast (B&B)
For Investment
Although some lenders will be more comfortable with experience, most bridging lenders would not require you to have any level of experience when arranging rural bridging loans. If your purchase or refinance will require development within term some lenders may require experience in a similar project, however we also work with lenders that don’t require any experience at all! Experience may help achieving better interest rates and potentially more generous development funding terms.
For Residential
If you are looking to purchase or refinance your home using bridging, Loan to Values (LTVs) are around 75%, which means you will only need a 25% deposit on rural property purchases.
This can be useful for borrowers looking to relocate but have a delay in their sale or chain, allowing you to purchase the next property outside of your mortgage affordability, in this case you may need to sell the previous property before then re-mortgaging the rural property. This product is called Regulated bridging, having such regulation will cause additional underwriting on the exit of the bridging loan being clear.
Legal Requirements
Bridging lenders that lend against land will have a legal process of either joint representation, or sole representation.
Some will use sole representation, which means you will have two solicitors on a refinance or three for a purchase. With a purchase you might have a solicitor acting for you, another for the seller and then another for the bank. These types of transactions tend to stretch the legal timescale of a bridging loan as there are more companies involved.
If your lender allows for joint representation then you will have less companies involved, but be mindful you will still have 3 solicitors for a purchase, whilst a legal firm may be able to act for yourself and the bank, these will be two solicitors in one firm, one acting for either side only. From our experience we have found joint representation cases to flow to completion a lot quicker than sole representation. Buying land with bridging finance may come with a lot of queries and information, so in this case borrowers might find joint representation to be more useful.
This is not legal advice, please speak to a qualified individual.
Timescales
Every case if different with bridging, with rural purchases sometimes these can come with restrictions such as agricultural ties, occasionally these transactions can be detailed and cause delays. Timescales can span from days, to weeks, to months. At Mortgage Lane we pride ourselves on speed of application, to date we have arranged a rural bridging loan in just 16 days.
Formal Escalation
Lenders can be sympathetic with genuine urgencies, in these cases a rural bridging lender might accept a formal escalation request letter from your solicitor.
Generally the letter will entail information concluding the genuine urgency of the case, any threats of vendors withdrawing, auction completion date close by, financial duress.
In these cases, this approach can be a helpful touch to speed up the completion of a bridging loan to buy land.
frequently asked questions
A rural bridging loan is specifically designed for properties located in rural areas. These loans cater to unique needs such as purchasing farmland, rural homes, or other properties in non-urban locations.
Bridging loans can be used for a variety of purposes, including but not limited to:
- Purchasing a new property before selling an existing one
- Renovations or property improvements
- Buying a property at auction
- Releasing funds tied up in a property
- Property or land subject to a planning gain
Interest rates for bridging loans vary based on the lender, loan amount, and individual circumstances. Bridging loans generally have higher interest rates than traditional mortgages due to their short-term nature and the risk involved but you can expect rates starting from 0.79% per month.
It is possible to obtain a bridging loan with bad credit, as lenders often focus more on the value of the property used as security rather than your credit history, focus is predominantly on the exit, so for flips, the adverse should not cause any issues. However, with remortgage exits they may ask more questions about your mortgage options on exit. Rates can be slightly higher on rural bridging loans for borrowers with adverse credit.
Documentation requirements may vary by lender but generally include:
Proof of identity
Proof of income or financial status
Details of the property being used as security
A clear exit strategy (sale of property, refinancing)
Yes, rural bridging loans often come with various fees, including:
Arrangement fees
Broker fees
Valuation fees
Legal fees (lenders legals and your legals)
Exit fees
Depending on the ownership type this can range from 2 to 6 applicants. Usually on investments, more applicants are permitted, but for residential applications this can vary but usually less applicants will be expected.
Many leading lenders in the rural bridging loan market typically start their loan offerings at £50,000 or more. However, Mortgage Lane works with lenders that have various loan size requirements, giving you more flexibility. Essentially, the more you borrow, the more options you will have.
Bridging loans are typically short-term, ranging from a few months to up to two years. The exact term will depend on the lender’s terms and your specific needs.
Yes, bridging loans are usually secured against property. This means you will need to provide collateral, such as your current home or the property you are purchasing. Using more than just one security means that it is possible to get a rural bridging loan to fund 100% of your purchase.
Contact us to discuss your needs and financial situation.
We will assess your application and connect you with suitable lenders.
Provide necessary documentation and property details.
Upon approval, the lender will release the funds.
An exit strategy is a plan for how you will repay the rural bridging loan at the end of its term. Common exit strategies include selling the property used as security, refinancing with a traditional mortgage, or using other funds to repay the loan.
A quick rural bridging loan typically involves a lender with a full indemnity policy on all legal searches. This is crucial because the bridging application process is generally short, but local searches can sometimes take longer than 28 days. Having a lender willing to accept an indemnity policy can significantly expedite your completion process. Mortgage Lane has successfully completed a rural bridging loan from start to finish in just 4 days.