An increasing number of people are tapping into bridging finance to extend short leases on properties and maximise value.
Following the financial crisis, property owners and investors began to look for a broader pool of alternative liquidity, and this has led to growing awareness of bridging finance, which has become more popular and mainstream over the years since the crash.
A bridging loan can give leaseholders crucial access to finance when they are looking to extend a lease and improve the value of property, preventing them from having to sell at a heavily discounted price.
Extending a lease is also important when looking to sell a property as it opens up the selling process to a wider group of buyers. Banks struggle to lend on properties with leases of fewer than 65 years, so a property with a long lease can be attractive to both cash and mortgage buyers.
MTF was recently approached by a client who was looking to raise funds to extend a lease on an existing property in central
London and put down a
deposit on an additional investment asset.
The client had struggled to get a loan from a number of other lenders as there was only seven years left on the lease.
MTF (www.mt-finance.com) provided a £650,000, 12-month bridging loan, based on an open market value of £1 million. The process to extend the lease then commenced and the client was able to purchase a longer lease.
With a longer lease in place, the client was able to secure a long-term buy-to-let mortgage as well as purchase the additional investment flat.