Investors looking to purchase commercial property often have to act quickly. If finance is already tied up elsewhere within an existing portfolio, buyers will need an option to acquire appropriate funding quickly or risk losing out on a purchase. This is where commercial bridging loans can be useful.
Long term finance can take several months to secure. Many of the best opportunities present themselves with a change of use and/or add value potential. The most experienced and successful commercial property investors often recognise this and that’s where using Novellus and their deep understanding of the investment market can help to secure a loan.
If borrowers are struggling to raise the funds required, Novellus can take into account the specific circumstances around the asset and borrower, allowing for more flexible lending. This is one of the reasons property investors may choose a bridging loan for commercial properties.
What is a commercial bridging loan?
Commercial bridging loans are used to buy commercial property. They can be used to purchase mixed-use developments. This could include a retail unit with a flat (s) above, an office complex, or a development area that will include residential and commercial aspects. A commercial bridging loan is a short term funding option which is generally used to bridge the gap while long term borrowings are obtained or a change of planning/use is established thus increasing the value of the security.
Why choose a commercial bridging loan?
Commercial bridging loans can be used for buying a new business commercial premises or mixed-use property. If the commercial property does not qualify for a mortgage due to the current poor condition, a commercial bridging loan can allow the purchaser time to renovate it first before then applying for long term finance on the property. It can also be a good solution if there are outstanding planning issues which once resolved will make the asset better suited to the mainstream market.
Bridging finance is a good option when funding is needed quickly to secure the property prior to someone else buying it or if purchasing through an auction. When buying through auction it is necessary to pay a deposit immediately, followed by the full balance, usually within 28 days. Often buyers can leverage having the funds immediately available when making an offer and this can enable a discount to be negotiated.
So long as a borrower has an exit strategy in place, which is usually refinancing the property with long term finance, or selling the property before the end of the bridging loan term, an application will be considered. The borrower will need to provide security to act as collateral against the loan. Applications, where the borrower has significant capital entered into the transaction, will be viewed favourably.
Novellus normally provide loan terms between 6-12 months. The borrower is not tied into the full term but can pay off the loan at any time within that period without incurring any early repayment fees (save for the interest payable during the repayment notification period). Funds can often be released in a matter of days after the application has been approved.
Find out more
To help discover the approximate costs involved with bridging finance use the online bridging loan calculator for guidance.
Novellus offers a stress-free application process. For the best way to find out if they can assist you is to call today on 0203 397 4871 or fill out our form below.