Development loan/finance

Discussion in 'Property Finance and Real Estate Loans' started by Kefte, Aug 22, 2019.

  1. Kefte

    Kefte New Member

    Hi,

    We are renovating my third property to sell (fourth if you count our home), which we did using our own savings. We used money from previous sale profits to help put a deposit towards our home. Then a few years ago I inherited a shop and flat, this needs more work than previous and is currently valued at £90,000 but could be worth £150,000-200,000 after work (estate agent valuations). Works cost in region £30,000. There is no finance secured on this property.

    Several people I have spoken to have suggested bridging loan, but having explored offers it could cost almost £10,000 in interest and fees. Other options: remortgage our home, but I don't think we have enough LTV wiggle room. Because it's a commercial building, I am struggling to find finance options that are open. Any suggestions?
     
  2. Longterminvestor

    Longterminvestor Administrator

    If you look at the cold hard figures, £40,000 bridging finance (including charges and fees) would increase the property value by between £60,000 and £110,000. Is it really that difficult to see the potential upside?
     
  3. realdeals

    realdeals Active Member

    As long as the potential valuation uplift is far greater than the overall cost bridging finance surely this is a no brainer?
     
  4. This is the hidden beauty of bridging finance - it all depends on how big the uplift on your property compared to the total cost of the work/finance. Try not to look at bridging finance as expensive - look at the potential uplift.
     
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