Those of you who have worked with Bridging Finance Solutions in the past may be aware that we offer bridging finance across England, Scotland and Wales. With so many fantastic properties bursting with potential across the three countries, we have had the pleasure of assisting property developers and investors in turning unused properties into residential homes and money-making opportunities.
Wales, in particular, is becoming a hot spot for investment, and in this blog, we will provide full guidance on Welsh bridging finance.
Keep reading to find out more.
What is a Bridging Loan?
A bridging loan is a short-term loan secured against a property, designed to help move a project forward or meet the funding required for a purchase, development, or refurbishment to commence. Bridging loans tend to last no longer than 12 months and are designed to bridge the gap until a more permanent finance option can be found, be that the sale of a property, securing a mortgage, or an alternative investment.
At Bridging Finance Solutions, we provide fully regulated bridging loans under the financial conduct authority, ensuring that our borrowers and we are protected. For a comprehensive overview of how bridging loans work, take a look at our complete guide to bridging loans.
Why Bridging Loans Are Particularly Useful in Wales
Bridging loans are particularly useful in Wales for a range of reasons. Due to the country’s landscape, there are countless rural properties, listed buildings, and agricultural land just waiting for redevelopment.
Uninhabitable Properties in Wales
A lot of the rural properties that have been on the market for years are considered to be uninhabitable, which means that those looking to invest in those properties would not be eligible for a typical mortgage until the property is up to standard.
For a property to be eligible for a bridging loan, it doesn’t need to be habitable; we assess the property’s value, potential, and the proposed value upon development. Bridging loans provide developers in Wales with property opportunities which may have previously been unobtainable. For more on how bridging loans compare to traditional mortgages, read our guide on bridging loans vs mortgages.
Common Uses of Bridging Loans for Welsh Buyers
There are plenty of ways bridging loans can be used to help secure a property in Wales, including:
Fast Bridging Loans Wales: Breaking a Property Chain
If you are in the process of looking for a new property, but you still need to sell your current property, it can feel like you’re at a standstill, waiting for your property to sell before you can look at other options. This can be incredibly difficult, especially if you’ve already spotted a property that you want.
In Wales, the property market can be quite competitive, so you need to act fast when a desirable property hits the market, and with a bridging loan on your side, you can. Our fast property purchase bridging service is designed exactly for this situation.
Auction Purchases
With so many rural properties available in Wales, many of them considered uninhabitable, a lot of properties go to auction. Bridging loans are valuable when securing property at auction, as there is a 28-day allowance for payment after a property has been bid on, meaning you need to secure the finance to purchase fast, or risk losing it.
Because bridging loans can be secured in a matter of days, they serve as a fantastic solution for the quick turnaround required for auction purchases. Find out more about how this works on our property auction finance page.
Property Renovation and Refurbishment
Again, with many properties in Wales falling under the uninhabitable label, there opportunities to secure property at a lower price, renovate and refurbish, and then sell it for a higher price.
Bridging loans allow you to bring these properties up to mortgage standard, giving you the freedom to improve them and then later secure long-term financing. Take a look at our property refurbishment finance page for more details on how we fund this type of project.
At Bridging Finance Solutions, many of the people we provide bridging loans to have this exit strategy in mind from the outset.
Land Purchases
In Wales, development land opportunities are available. Though it is possible to get a mortgage on land, banks often view these ventures as high risk.
When applying for a bridging loan, the value of the land and the proposed work completed on the property are assessed, and then finance is provided.
Our residential development finance service covers this type of project in more detail.
Converting Unusual Properties
In Wales, there are many fantastic chapels, farmhouses and barns, all with great potential for conversion or refurbishment. There is a growing demand among buyers for unusual properties, but securing a mortgage for them can be very difficult or impossible.
For bridging loans, the criteria are much less rigid, and if a property has good potential or will provide a good return on investment, providers are much more inclined to release funds.
Our property conversion finance service is well-suited to exactly this kind of project.
Buy-to-Let and HMO Investment
As the property market continues to have its ups and downs, there has been an increased demand for buy-to-let properties and HMO investments, especially in major cities in Wales, with thousands of students and young professionals flocking to the areas.
Standard mortgages cannot be used on an HMO development, and so bridging loans create a perfect solution for your HMO development, especially when a quick turnaround is necessary.
For a full breakdown of this process, read our bridging loans for HMO conversions guide.
Property Finance Wales: The Application Process
If you are located in Wales and you have been considering obtaining a bridging loan for the purchase, development or refurbishment of a new property, you can expect to undergo the following process:
Initial Inquiry
Before you can even be considered for a bridging loan in Wales, you first need to make an initial inquiry. This involves reaching out directly to us as the lender or via a broker to detail the amount you need to borrow and the estimated loan term you are seeking.
At this point, before you continue further with the process, we will be able to get a clear picture of whether the application is viable.
Exit Strategy
You need to identify your exit strategy early on, before you even consider sending in your documentation and full business plan. If you are unable to identify an exit strategy for your loan, your application will be rejected.
Your exit strategy could be the sale of the property, remortgaging or even sourcing alternative development finance; whatever it is, it must be feasible.
Documentation
When applying for a bridging loan, you must provide the necessary documentation. It is important that you provide all of the correct documentation with your application, especially if you need finance fast, as failing to do so can drastically delay the process. For a full overview of common pitfalls, read our guide on 5 mistakes to avoid when applying for a bridging loan.
The documentation you should provide includes:
Photo ID
Before you can be considered for a bridging loan, we need to verify that you are exactly who you claim to be. There are plenty of historical cases of people using a false identity to secure funding, so lenders need to complete a thorough check of your identity before proceeding.
Proof of Address
You will need to provide a recent utility bill, council tax bill or bank statement that proves that you live at the property you have declared. All of this information is just to verify your identity and any claims that you have made as part of your application.
Property Details
You need to provide concise details about the property you wish to purchase or refurbish, or regarding the land you wish to develop. The full details are necessary, as lenders will use them as collateral if you default on your loan repayment.
With the property details, the lender will be able to conduct a full assessment of the property and decide whether the investment is worth the risk.
Valuation Report
Before applying for a loan, it is important that a full valuation report is prepared and completed by a trusted provider. Whilst the lender will typically arrange their own valuation, providing your own estimates of the property’s value can help expedite the process.
Financial Background and Experience
When a lender is investing in a project, they’re not just investing in the property; they’re investing in you. It is important, but not essential, that if you have a portfolio of projects you have previously worked on, you include it with your application.
It is also important that you are transparent about your financial background. If you have a poor credit history, that doesn’t necessarily mean that you will be denied the loan, as a lot of bridging loan providers focus more on merit, reputation and experience, so if you have all of that, you still have a good chance of receiving the loan.
Business Plan
Your business plan is crucial documentation to provide to your lender and can make or break your application. Your business plan should outline everything, including financial requirements, the project timeline, contingency plans, and, if you already have people in mind you will be working with on the project, their details.
Lender Assessment
After all the documents have been assessed by the lender, the lender will do their own assessment. This usually consists of their own evaluation of a property, checking its value, and determining whether the risk is worth taking.
Depending on the lender, you can expect to hear back within days or weeks. At Bridging Finance Solutions, we pride ourselves on being fast in our assessments, and as long as you provide us with all of the necessary information and documentation, we will make a fast decision regarding your loan.
Our bridging finance FAQs cover many of the most common questions we receive during this stage.
Getting Funds
Once you have been approved for a loan amount and the terms have been agreed upon, the funds will be released to you, and you will be expected to make repayments as laid out in the agreement, whether monthly or through rolled-up interest.
Secure Bridging Loans in Wales With Bridging Finance Solutions
Through this guide, you should now have a better understanding of why bridging loans have grown in popularity in Wales and how you would approach applying for a bridging loan.
Do you have a development, renovation or property purchase that you need a time sensitive financial injection for? Get in touch to make it happen with BFS today.
