Bridging Finance Explained: Beginners' Guide

[@spaceman6541]

Mr Wright! Spectacular video. You've just switched on the light bulb for me! Many thanks

[@KevinWrightProperty]

You are very welcome and glad you think so - browse your way through a few more, there are masses here to keep you occupied.

[@JawadAli-s3q]

Amazing tips and advice . Thanks so you much.

[@KevinWrightProperty]

you are very welcome

[@rankslav6920]

This has been very informative thanks for the insights 👍🙏.

[@KevinWrightProperty]

you are very welcome

[@Pradotna25]

Easy to understand and great advice mate

[@KevinWrightProperty]

glad you think so, thanks

[@petersteelenator]

Much appreciated , Kevin.

[@KevinWrightProperty]

welcome Aravind

[@ramoncampoi7370]

Hi Mr Wright: I have some “stupid” question and would you mind answering them? - Can I buy a house using residential mortgage and rent it out? - Can I buy a house using a residential mortgage and add value and refinance it? Or sell it like a flipping? Thank you👍🏼

[@KevinWrightProperty]

Happy to Ramon - Can I buy a house using residential mortgage and rent it out? - Definitely not. Main residence mortgages are for the property you live in only. If you intend to rent it out you must have a Buy To Let mortgage. - Can I buy a house using a residential mortgage and add value and refinance it? - Absolutely not and to do this is fraudulent. Watch this video to learn why kzbin.info/www/bejne/rpTXd41vbZ2CjJY&lc=UgxxqLWU1gqI0g--YP14AaABAg - Or sell it like a flipping? - Also absolutely not, for the same reasons this is also fraudulent. Watch this video to learn why kzbin.info/www/bejne/rIKneHiGftOmmcU

[@ramoncampoi7370]

Thanks Kevin👍🏼👍🏼

[@ramoncampoi7370]

@@KevinWrightProperty Thanks Kevin👍🏼👍🏼

[@ramoncampoi7370]

Now I have another question: If a buy a house via residential mortgage and in 10 years my circumstances has changed I cannot pay the mortgage or I’m not happy living in house for any reason. Would I lost all repayments and deposits considering that I cannot sell the house due “breaking” the rules with the lender?

[@KevinWrightProperty]

@@ramoncampoi7370 - no because you were honest and lived in the property for several years before your circumstances changed. You wouldn't lose anything, you just switch to a Buy To Let mortgage when you decide to rent it out. The fraudulent part is pretending you want to live in a property or only living in it for a few months then renting it out. if you don't do that you are fine.

[@prestonmcgurk4772]

Such great advice and information thanks Kevin 😊

[@KevinWrightProperty]

much appreciated Preston. You still want to chat over a deal with me, as you mentioned a few days ago?

[@rmendola759]

Hello, great information there! Do bridging loads also lend for the renovation costs? Or perhaps you have a video explaining this? Thanks Kevin

[@KevinWrightProperty]

thank you, in some cases yes that is possible. I do have a video on that - here it is - kzbin.info/www/bejne/sGKte6WbgbySq5o

[@jasonpatterson365]

Good information 👌🏿

[@KevinWrightProperty]

thank you Jason

[@jameschallinor622]

Hi there, say the property is 100k and the bridging loan is 75k, must the other 25k be provided by yourself in the same way it would a BTL mortgage?

[@KevinWrightProperty]

no James, bridgers work differently from mortgage lenders. The 25% deposit doesn't have to come from yourself. One of the many ways bridging's flexibility allows people to do more with less.

[@microclipzzz885]

Is the bridging finance secured against my residential home or the property we would be buying. Also is it 25% of the purchase price or potential price

[@KevinWrightProperty]

good questions, happy to answer them - bridging is almost never secured against your own residential property and almost always secured against the property you are buying. Deposits are always based on the true current value and not the potential future value.

[@mumoffour6860]

Does bridging work for getting a property that’s commercial to change it to residential and remortgaging? Any pit-falls I should look out for?

[@KevinWrightProperty]

ertainly it works for that. Just the usual pitfalls, not costing out the project correctly, paying too much for it, underestimating the time and cost of the works and over estimating the end value.

[@andyxi2400]

Hi Kevin...I've just gone through most of your videos and want to say a huge thanks to the incredibly valuable information your'e putting out there. I've got one question regarding using a bridge for your main residence. If we forget about the current restrictions on 90 to 95% LTVs, so in more normal times, is it possible to buy a run down property, bridge and refurb, get a 90 or 95% mortgage, and if you've increased the value enough, actually get cash back. So as an example, 100k purchase plus 25k refurb, combined as a refurb bridge, so deposit 30%=37.5k, loan 87.5k. Done up value 150k, mortgage at 90%=135k. Pay back loan 87.5k to leave 47.5k, therefore net cash back of 10k. Obviously, once you factor in fees, including bridging costs, that cash back will be mostly gone. Or in today's environment, 80% mortgage= 120k - 87.5k = 32.5k. Therefore effective deposit of just 5k + fees etc. Is this possible, and are my figures right? Many thanks.

[@KevinWrightProperty]

Hi Andy, thanks for your appreciative comments, I appreciate that. I hope you took a break during that extended binge watch :). The principle of using a bridging loan to buy a dilapidated property and fix it up to be your main residence is a sound one, it can work. Getting the mortgage at the back end is more complex and would have to be worked out and clarified at the outset. Main res mortgages are based on your provable income, less commitments, life style expenditure to determine how much you can borrow, so getting a fixed percentage of the property vale is not a given. As long as it is clear from the beginning that your income is enough to get the size of mortgage required to repay the bridging loan in full, it can work as you suggest. By using the brokerage that I am a partner in, one of our brokers could work all that out for you. Your figures do work - buy at £100k, spend £25k on the refurb, get the mortgage based on the done up value of £150k. An 80% mortgage of £120k (as long as you earned enough to get a £120k mortgage - see above), would leave you with £5k of cash left in, at a simplistic level. Costs and fees would clearly be on top of that - stamp duty, legal, valuation fees, plus the bridging costs.

[@andyxi2400]

@@KevinWrightProperty Thanks so much Kevin. Yes, I got the bit about sorting out the mortgage at the outset when you talked about regulated bridging and factored in that I will be good for the mortgage. As long as the principle is sound, hopefully I can put this to good use. Cheers!

[@andyxi2400]

@@KevinWrightProperty Oh yes, what is the name of your brokerage firm?

[@KevinWrightProperty]

@@andyxi2400 - great, we would be happy to broker this for you

[@KevinWrightProperty]

we are registered with the FCA as Positive Property Finance but our trading name is WP Property Finance Andy

[@liviumanea6282]

Thank you!!!!

[@KevinWrightProperty]

welcome

[@Dan_Vel_Luka]

Hi Kevin, as always great and valuable content, thank you. One question: How can I release cash from my current property. My current mortgage LTV is around 44% and my mortgage is fixed for next 2 years.

[@KevinWrightProperty]

Hi Daniel, thank you for your comments. Your fixed rate mortgage will have redemption penalties during the fixed period, so keep with your current lender. You can look at a 2nd charge secured loan that will sit behind your mortgage, leaving it undisturbed. This will be income dependent

[@davidgray7204]

Hi Kevin would you get a bridging loan for a few months then get a mortgage or get bridging loan for 12 months giving you time to sell the property

[@KevinWrightProperty]

absolutely not David. As soon as you tell a mortgage lender that is what you plan to do they will terminate your application. They dont give out mortgages so people can sell properties, they give them so people can keep them and rent them out, not sell them at the first opportunity. Not telling them what you plan to do is obtaining a mortgage fraudulently by not releaving a key bit of information that would have altered their lending decision. You keep on the bridging loan until you sell the property.

[@mararayp]

Kevin, would someone use a bridging loan to buy a new property because its taking longer than we thought to sell our house?

[@KevinWrightProperty]

you need to get very clear on the costs of doing this Mark, because its dead money. By that I mean, when you use it for commercial purposes, you offset the cost of bridging against the profits of the deal but when its for your own main res, there is nothing to offset against, its all cost. Almost everyone fails to justify the cost in this respect, because when set against the dream house you want to buy, its a very expensive dream. People do occasionally using bridging for this purpose but only when they believe the tens of thousands it costs is a worthwhile price not to lose the property they want to buy.

[@demosthenes1296]

Hi Kevin, many thanks for the time you take to share your expertise around bridging finance. I did some research today and all sources suggest that you can't access bridging finance unless you have an existing property/properties to secure the loan against. I would like to bid on an upcoming auction with great uplift potential but I don't have an existing property just £50k in cash. I had hoped to secure bridging finance. Am I scuppered? I have heard it's a fool's errand to bid relying on a mortgage in principle as the lender can pull the rug for any reason leaving your 10% deposit down the drain. Should I just forget auctions and go for a property with a residential mortgage and once I have a property, presumably I will have access to bridging finance as an option?

[@KevinWrightProperty]

You are very welcome, thank you for your appreciation of my content. Be very, vary careful want you read and who you listen to. Why? because it is easy to a) get information from people who are incorrectly presenting the facts due to their impaired/inaccurate knowledge or b) incorrectly interpret what you read/watch/listen to. You can file it under b) when you say "all sources suggest that you can't access bridging finance unless you have an existing property/properties to secure the loan against." - factually that is correct but your misinterpretation is that - you don't need to already own a property because in almost every case the property you intend to buy IS the property you secure the loan against. Of the hundreds of bridging loans we have brokered over more than the last decade, well in excess of 90% of them have been secured against the property being purchased, rather than a property already owned. "I had hoped to secure bridging finance. Am I scuppered?" - Absolutely NOT! Were you to buy at auction, the good news is you don't need to already own a property - the property you are bidding on will be what the bridger secures the loan against. You r£50,000 cash covers the deposit, stamp duty and fees - you borrow the rest, including the refurb costs, if you need to. "I have heard it's a fool's errand to bid relying on a mortgage in principle" - in terms of an auction purchase, this is absolutely correct. The chances of any mortgage lender, with their longer post-Covid processing times, being able to release the money to complete the purchase within the 28 day timeframe an auction allows, is next to zero. if you want to lose your 10% deposit, relying on using a mortgage to fund an auction purchase is a sure fire way to succeed. I salute you for asking your question, this is how you learn. Reading this response what have you learned? Hopefully that no, you don't need to buy a property on a residential mortgage to be able to access bridging finance - you already have all you need to access bridging finance! Let me know

[@demosthenes1296]

@@KevinWrightProperty You are a gentleman, sir! Have to say, I assume you're incredibly busy, so it speaks volumes that you should take the time to reply to all these posts. Just out of interest, do you offer any advisory services?

[@KevinWrightProperty]

@@demosthenes1296 - you are welcome. Certainly we do, I got all this knowledge about bridging by brokering hundreds of bridging loans over more than a decade. Look for the about tab on my home page for my email address to access our brokerage.

[@Woooshhh]

Where would you go for the bridging loan? I.E who would you go for a bridging loan?

[@KevinWrightProperty]

Hi Daniel, very simple answer to that - US! As bridging brokers we have unrivalled experience in selecting the right bridger for each project. That is based on us brokering literally hundreds of bridging loans over the past decade. You just find the deal, bring it to us and we will find the best bridger for you.

[@amakaj2003]

Hi Kevin I know bridging loan is asset based but is there something like "bridging principle " ? So I'd know how much I can borrow and in what terms . Also when do I start to pay for bridging loan? After completion or before ? Thank you

[@KevinWrightProperty]

I think you mean a Decision in Principle' like you get with mortgages? - The first lesson to apply with bridging is don't apply what you know about mortgage to bridging, it works counter intuitively to mortgage in almost every way. Bridgers dont give you DIPs like mortgage lenders do because bridging is property specific and what you can borrow can change with every property. The rates also differ case by case. You start paying for a bridging loan the day you borrow the money - on the day you complete.

[@amakaj2003]

@@KevinWrightProperty thank you . That's exactly what I meant :)

[@KevinWrightProperty]

@@amakaj2003 great, glad I was able to answer your question.

[@derrollindsay8006]

Hi Kevin. Can you explain to me how the bridging works when you come to the end of your term on a least option and you haven’t got enough cash to buy? I’ve heard you explain it in a video with Nathan W but I didn’t quite get it. Thanks and great video again

[@KevinWrightProperty]

simple Derrol you complete the purchase using a bridging loan, then get a mortgage to repay the bridging loan. You have watched the video I did with Nathan Winch but have you watched my video that explains it? watch this video and if you still don't get it, ask me again. kzbin.info/www/bejne/iIfQZ6qXiNymsNE

[@derrollindsay8006]

Kevin Wright Ok and is there a time frame you have to hold the bridging loan for like say six months? Or can it all be done much quicker? I’m just thinking if you have to have it for that long you pay more interest? Thanks Kevin

[@KevinWrightProperty]

@@derrollindsay8006 - a number of bridgers work on a 1 month minimum term Derrol, some work on 3 months minimum. No reputable bridger ties you into them for 6 months

[@derrollindsay8006]

Kevin Wright Ohh ok. Thank you so much for you help Kevin. Really appreciate it, enjoy your day

[@KevinWrightProperty]

@@derrollindsay8006 - welcome

[@jugjeevanbrar167]

Hi Kevin, this is a very helpful video. Is there a way to get in contact with you, I was hoping to pick your brains on property related topics

[@KevinWrightProperty]

Glad you found it so Jugjeevan. Sure, email me at [e-mail]

[@PP-xg1je]

Hi Kevin this is all new to me so got a silly question could bridging loans be used for personal matters kinda like a loan to clear up debts. We’re both full time workers in steady jobs even when the pandemic started. We are planning on up grading to a new house as still have about 110 thousand and about 30 thousand still to pay in a long term loan both payments to the 1 lender. Would the bridging loan company even look at our suitation cheers

[@KevinWrightProperty]

when you say 'long term loans' - you mean a mortgage don't you P P? If you upgrade to a new house to live in, that necessitates you paying off these long term loans (mortgages) from the sale of your property - you don't need a bridging loan to do that, you just need a new mortgage for your new main res. Bridging loans are short term loans that you need to take a long term loan (mortgage) to pay off. Unless I have misunderstood your question, using a bridging loan in this circumstance would be a needless and costly expense - just do it with a new mortgage.

[@ashpervaiz2211]

hi kevin looking to purchase land from parents can i do this via bridging loan

[@KevinWrightProperty]

in principle yes you can Ash. Click the ABOUT tab on my home page to email me the details and we can tell you if what you want to do works.

[@tina1698]

Can you recommend a bridging company?

[@KevinWrightProperty]

Thanks for your question but it would be inappropriate for me to do that. Simply because, of the dozens of bridging lenders out there, it would be impossible to know which one would best serve your needs, both personally and for any property you may wish to use bridging on. As brokers who have brokered literally hundreds of bridging loans over the past decade, our responsibility would be to analyse the property you had in mind, together with your background and find the bridging lender that most closely aligned with your needs. Whenever you want us to provide that service for you, we would be happy to do so.

[@megaman2016]

If you take out a 12 month bridging loan, does the house after refurb have to be sold by this time? Do you have to factor in the 3-6months selling time?

[@KevinWrightProperty]

Good question - the answer is yes, you do. When you take out a 12 month bridging loan you are saying to the lender - I will be able to give you back your money within 12 months. That means, once you have refurbed it, you have the remainder of the 12 months to a) sell it or b) refinance it onto a mortgage.

[@megaman2016]

@@KevinWrightProperty thanks, you don't hear many people talking about this wrinkle.

[@KevinWrightProperty]

@@megaman2016 - I always give it to you straight, no BS.

[@megaman2016]

@@KevinWrightProperty I can tell, I've subscribed instantly

[@KevinWrightProperty]

@@megaman2016 brilliant, thanks for that. When you get time, grab a coffee and browse through some of my 100+ videos on here, I hope you find them useful.

[@NoName-jq7tj]

Can I buy a BMV house at auction on a bridging loan and then do it up and flip it quick time. I’m new to all this. Been watching a lot of Homes Under Hammer on the BBC.

[@KevinWrightProperty]

certainly, people have doing exactly that for years. Check out this video of mine, it warns you of what you watch out for when buying at auction - the bits they don't tell you on that programme kzbin.info/www/bejne/r4TCYqWsm6qfpcU

[@NoName-jq7tj]

Hello Kevin do you still need to deposit a large amount of money when you attend a physical auction just to get in. I think you replied to a previous message I left on this issue because of the pandemic auction houses are asking for money upfront just to bid.

[@KevinWrightProperty]

@@NoName-jq7tj - auctions never used to want that money deposited with them pre-Covid. When the in-person auction rooms open back up, we will need to see how their business model changes.

[@NoName-jq7tj]

@@KevinWrightProperty Hello Kevin Thanks for the reply. This at present would be a real concern for me going forward. This is a massive start up cost that I don’t have access to at present. I know you get the deposit back after the auction ends but still.

[@KevinWrightProperty]

@@NoName-jq7tj - very simple workaround to this then. You can avoid massive start up costs by just not using auctions to buy property. Compared to estate agents, they are overrated anyway. Even then, you are going to need significant cash to buy property whichever way you do it, maybe just save harder?

[@mattclark7634]

Hi Kevin i have two buy to lets and looking at a 3r tomorrow, ones i have at the moment are in my name, going forward is it wise to set up a LTD company to buy, buy to lets please? Also the house i am looking at tomorrow is for sale at £225,000 it looks like been empty a while so i was going to offer £200,000. i am sitting on £135,000 in my bank. i have never done bridging before but i feel this is my best option. would it be best for me to use £60,000 of my cash to put in or if i say put £90,000 in will that get me a better deal on a bridging loan?? i am very impressed by you, if i can get this house i will be calling Paul at your firm!!! Your firm is local to me too, please advise kind regards Matthew

[@KevinWrightProperty]

Ltd Co or personal name is a great question matt, and a popular one too - which is why I did a video on exactly that to help you decide the right path for you - watch this when you get a chance kzbin.info/www/bejne/hn2QmnunnrNmr6c

[@KevinWrightProperty]

Bridging is brilliant for buying doing up and refinancing at the uplifted value Matt. They key skill is not to overpay for the property in the first place. I produced this video to help you to understand how not to overpay and to work out whether £200k is too high a price to pay - which it probably is - kzbin.info/www/bejne/m5ezYnSQbpJlnsU

[@KevinWrightProperty]

thank you for your kind comments Matt - I like to just tell it how it is, no BS

[@NoName-jq7tj]

Hello Kevin please advise can a bridging lender decline the full amount of a loan. I was talking to a broker today & he said that a lender may only offer you 55% of a loan that you need.

[@KevinWrightProperty]

Bridgers can do anything that want to - its their money. Its usually safer to only deal with brokers who are vastly experienced in bridging, like us - we have brokered hundreds of bridging loans in the past 10 years. We will tell you exactly what bridgers will and wont do. My contact details are on the about tab on my home page here.

[@NoName-jq7tj]

@@KevinWrightProperty Thank You Kevin. This is a concern of mine because after the 28 day cycle after auction & all I get is 55% then I could loose the 10% I put down prior to auction.

[@KevinWrightProperty]

@@NoName-jq7tj - you are right to be concerned over that. What percentage of your winning bid at auction were you expecting to be able to borrow?

[@NoName-jq7tj]

@@KevinWrightProperty There is no percentage or a winning bid at present. I just wanted ask someone if a lender could decline the whole amount & instead just offer half the amount. I had a conversation today with a broker who advised me that your initial deposit has to be greater if that is the case. I was under the impression a lender just gives the rest.

[@KevinWrightProperty]

-@@NoName-jq7tj the rest? do you mean 90% of whatever your winning bid is? If so, no you are mistaken, bridgers lend 75% not more. BUT, when you make a specific application to a specific bridger, you know what percentage they are going to lend before you bid, so you will know if they are going to lend 75%, 55% or whatever

[@David-gh3qc]

👏

[@KevinWrightProperty]

thx

[@LightGesture]

1% every month. Whoaly smokes

[@KevinWrightProperty]

what did you expect?

[@KevinWrightProperty]

@@EbKoomson 🙂

[@KevinWrightProperty]

@@EbKoomson 🙂

[@KevinWrightProperty]

@@EbKoomson thanks