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FAQs
When is a second charge required?
- If you have a high Early Repayment Charges (ERC) on existing mortgage.
- Lack the credit rating required for mainstream borrowing.
- If you currently have a great interest rate you don’t wish to lose.
- If you cannot obtain necessary funds required via remortgaging.
How does a bridging loan work?
There are two types of bridging loan: ‘closed’ and ‘open’.
Closed bridging loans
With a closed loan, there is a fixed repayment date – you will normally be given this kind of loan if you have exchanged contracts but are waiting for your property sale to complete.
Open bridging loans
With an open loan, there is no fixed repayment date, but you will normally be expected to pay it off within one year.
Whichever kind of loan you take out, the lender will want to see evidence of a clear repayment strategy, such as using equity from a property sale or taking out a mortgage.
They will also want to see evidence of the new property you are purchasing and the price you plan to pay for it, as well as proof of what you are doing to sell your current property if relevant.
You should also have a back-up plan in place in case your repayment strategy fails.
How are Development Finance rates calculated?
Development Finance is typically arranged based on a valuation assessment of the project that is planned, once all the works have been completed – known as the Gross Development Value (GDV).
Who can apply for a commercial mortgage?
Limited companies, SPVs, LLPs, partnerships and sole traders are eligible to apply for a commercial mortgage.
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