Bridging loans - any recommendations?

[cps13]

Hi

We are looking at buying a derelict barn at a value of ~£425k. Rebuild cost around £280k. As it’s not in a condition you could live in it, it is not possible to get a mortgage on it.

We have initially been told by one broker that they won’t be able to lend more than 50% of the purchase price.

This seems odd to me, I thought the whole purpose of bridging loans was to fund the purchase and initial cost? Then further funds released upon progress.

We have around £250k in savings and equity of our existing house.

Has anyone been though this sort of process before?

Thanks

[Dick Dastardly]

Is this a residential bridge or a commercial one? I.e are you doing it so that you can live in it, or so you can develop it to sell on? There's different rules that apply.

[cps13]

It’s for residential use. It already has planning granted for a single dwelling. We would also live in it rather than sell on.

Thanks

Edited by cps13 on Monday 14th September 20:11

[anonymous-user]

You're looking to borrow £500k to buy and do up an unmortgageable agricultural building that, at the moment, might or might not be worth £400k.
50% sounds a good offer to me.

I take it the barn has already got full planning permission for the project.

[Dick Dastardly]

I was just on a call with my pal Luke at PPF about a deal he's arranging for me and I ran this past him. He said that this looks like it might be hard to beat but they could look to raise the funds from your current home.

Him and his team are here: https://www.purepropertyfinance.co.uk/bridging-loa...

[NickCQ]

cps13 said:

This seems odd to me, I thought the whole purpose of bridging loans was to fund the purchase and initial cost? Then further funds released upon progress

You will need to put some of your own money in. An advance of 50% of purchase price plus cost is (as mentioned above) a good offer in this or any market.

If you only have £250k equity and you can't sell your current property (as you need to live in it), I don't think you can afford to do this project, unless you sell and rent during the rebuild, or live in a caravan as they do on Grand Designs