Bridging loan for lease extension
Any leasehold property with less than 80 years left on its lease is generally considered to be on a “short lease”.
The value of a leasehold property steadily decreases the less time there is left on its lease, so if you are purchasing a property with a short lease, you may be refused a traditional mortgage.
A bridging loan can be the ideal solution in this situation. It can give you the money to purchase the property, then get a lease extension, leaving you eligible to apply for a traditional mortgage to replace the bridging loan.
How to get a bridging loan for lease extension
Bridging loans are generally only offered by private banks and lenders or through dedicated subsidiaries of high street banks. All of these normally only offer their services through intermediaries, meaning you will likely need to apply through a loan broker to get a bridging loan.
How much does a bridging loan for lease extension cost?
There are three main costs with bridging loans:
- Arrangement fees (when you take out the loan – usually 1-2% of the capital)
- Exit fees (charged by some lenders when you repay the loan – again, usually 1-2% of the capital)
- Interest (usually charged either monthly, or rolled-up and paid as a lump sum when the loan term ends)
Compare bridging loans for lease extension
If you need bridging finance for a lease extension, it is a good idea to compare deals from as many different lenders as possible. Our free bridging loan calculator makes this quick and easy, doing most of the hard work for you. Try it out now to see what sort of deal you could get on a bridging loan.
Need a bridging loan for lease extension? Get in touch with our friendly expert team of loan brokers using the contact form on the right or by calling 0117 313 6058.