Property Finance

The main difference is term and purpose. Bridging finance is short-term, typically up to 12 to 18 months, and is designed for situations where funds are needed quickly or where a property is not yet in a condition that a long-term lender will accept. A commercial mortgage is a longer-term arrangement, usually 5 to 25 years, used when a property is in a lettable or tradeable condition and the borrower wants to hold it over time. Bridging is more expensive than a commercial mortgage because of the short-term nature of the lending. It is designed to be repaid relatively quickly, either through the sale of the property or by refinancing onto a longer-term product once the circumstances allow. Using bridging finance for something that should be a commercial mortgage, or vice versa, can create unnecessary cost or the wrong structure for the situation.

An exit route is the defined plan for how short-term property finance will be repaid at the end of its term. For bridging finance, development finance and refurbishment finance, lenders will assess the exit route as carefully as they assess the property and the borrower. A credible exit route might be the sale of the property once works are complete, refinancing onto a commercial mortgage once the property is tenanted, or the receipt of funds from a clearly defined source within the term. A vague or underdeveloped exit strategy is one of the most common reasons property finance applications run into difficulty or cost more than expected. We look at the exit route early, not as an afterthought.

It depends on the type of finance, the property and the lender. Bridging lenders typically lend up to 70 to 75 per cent of the current value of the property, though some will go higher depending on the strength of the exit route. Commercial mortgage lenders typically lend between 65 and 75 per cent of the property value. Development finance lenders assess both the total development cost and a percentage of the Gross Development Value (GDV), which is the projected value of the finished project. These are general ranges. The actual amount available in any specific case depends on the property type, location, condition, the borrower's background and financial position, and which lender is being approached. We will give you a realistic view of what is likely to be available before any application is made.

In most cases, yes. The majority of development finance lenders require planning permission to be in place before they will commit to a facility. Planning adds certainty to the project and reduces the risk from the lender's perspective. There are lenders who will consider applications where planning is expected imminently and the timeline is clear, but this is less common and typically involves a different risk profile. If planning is still in progress, it is worth speaking to us so we can advise on timing and what preparation can be done in advance.

Yes. Both auction finance and longer-term property finance can be arranged for purchases through a limited company or Special Purpose Vehicle (SPV). The lender will assess the company as well as the individual directors, and personal guarantees from the directors are typically required. If you are considering a company structure for the purchase, take independent tax and legal advice before committing to it. The tax implications of holding property through a company are significant and the right structure depends on your wider financial position and long-term plans. We arrange the finance once the structure is decided.

It depends on the type of finance and the lender, but most property finance applications require a combination of the following: Proof of identity and address for all borrowers and directors Personal and Business bank statements, typically three to six months Evidence of the property: address, details, current valuation or purchase price For investment property: tenancy agreements and rental income evidence For development finance: planning permission, cost schedule, professional team details and a valuation of the completed project For owner-occupier commercial mortgages: business accounts, management accounts and bank statements Details of any existing finance secured against the property or within the portfolio   We will walk you through exactly what is needed for your specific application before anything is submitted, so there are no surprises and the case is prepared as clearly as possible from the start.

It varies considerably depending on the type of finance. Bridging finance can sometimes be arranged within a matter of weeks where the case is straightforward and the legal work moves quickly. Commercial mortgages and development finance typically take longer because of the valuations, legal due diligence and underwriting involved. Preparation is one of the biggest factors in how quickly a case moves. The clearer the application and the more complete the documentation from the start, the fewer delays there tend to be. We manage the process from our end and keep communication clear, but we will always give you an honest view of the likely timescale at the outset.

Often, yes. A decline from a high street bank does not mean finance is unavailable. High street lenders assess property transactions using criteria that do not always account for the full picture. Many specialist and challenger lenders operate very differently and are set up specifically for the types of transaction that mainstream banks find difficult. We will look at what happened with the previous application, understand the reason for the decline, and work out whether there is a better route. If there is, we help prepare a stronger case and present it to lenders who are a better fit for the situation. If we do not think we can help, we will tell you that upfront rather than taking you through a process that wastes your time.

Semi-commercial property, sometimes called mixed-use property, combines residential and commercial elements within the same building. The most common example is a ground floor retail or office unit with residential flats above. These properties do not fit neatly into either the residential or commercial mortgage category. Lenders assess semi-commercial properties differently because they are effectively looking at two income streams with different risk characteristics; the commercial letting income and the residential letting income. Fewer lenders operate in this area, loan to value ratios are often lower than for pure residential or commercial transactions, and the assessment of the commercial element carries significant weight. Getting the right lender is important, and approaching the wrong ones wastes time.

This is a question for a qualified tax adviser and solicitor, not a finance broker. The decision has significant implications for your tax position, the cost of transferring existing properties, your personal liability and your long-term exit strategy from the portfolio. The right answer depends entirely on your wider financial position and personal circumstances. What we can tell you is that both structures are financeable. We arrange property finance for individual investors and for limited company and Special Purpose Vehicle (SPV) structures. Once the right structure is confirmed with your advisers, we can work out which lenders are most suitable and arrange the finance.