Bridging loans - flipping property

CH6

Hi all,


First time poster but long time lurker!


I'm looking to take my first steps in property (other than owning my own home) and had a question about bridging loans, as I think something I'd personally be good at is buy-to-flip, but I don't have a lot of cash available (if any).


Can bridging loans be used to cover the whole cost of a project? So for instance, 80k to cover a 70k house, 4k costs and 6k interest on the loan? Or will a bridging loan lender not lend over the purchase price?


Done a lot of research and this is the only point I'm still struggling with.


Thanks for any help or if I'm in the wrong bit of the forum please redirect me!

eddddy

CH6 wrote: »

Can bridging loans be used to cover the whole cost of a project? So for instance, 80k to cover a 70k house, 4k costs and 6k interest on the loan? Or will a bridging loan lender not lend over the purchase price?

So this would be development finance.

As I mentioned in another thread about auction finance...

They will loan up to a level where they are comfortable that they can repossess the property, put it in an auction and get their loan, interest and expenses back.

As you're a 'first timer' with no track record, they will be extra cautious of you.

e.g. You might buy a house remove half the roof to create a loft extension - then run out of money, leaving them to repossess a roofless house that will not achieve a very good price at auction.

CH6

Thanks eddddy - so basically the answer is yes they could, but it's up to the individual lender whether they do or not?

davidmcn

CH6 wrote: »

Thanks eddddy - so basically the answer is yes they could, but it's up to the individual lender whether they do or not?

I very much doubt anyone will lend if you're not putting in a significant amount of cash yourself. Bear in mind it's (nearly) impossible these days to get 100% mortgages even for bog-standard residential lending, never mind this sort of risky stuff.