This is a great practical example of how bridging loans can be used by normal folk, not just investors and developers.
My client owns a “normal” house with a nice large garden. They are in their late 60’s and stuck on an interest only mortgage with no repayment vehicle in place and only a handful of years left on the term. This is why they came to me for advice – initially to discuss a lifetime mortgage.
I’ve given them some figures to mull over in response to that, but I also came up with an alternative, which went down better than I thought it would!
What I’ve suggested is that they approach their local council with a planning pre-application enquiry, with a view to getting planning permission to build 2 properties in their garden.
They are in a great position as they already own the land, and all that’d be needed is a title split to put the new properties on their own title deeds.
I’ve found them a bridging lender who will lend enough on the current site (subject to getting planning permission) to repay their existing mortgage, and will fund 100% of the development costs of the new properties.
I’ve sourced a builder who has estimated the build should take 12 months from breaking ground to moving in, which fits nicely with the maximum term of the finance (18 months).
Once the two properties are sold, the clients will make enough money to repay the bridging/development loan, and have a nice lump sum in the bank.
They will be mortgage free and have some savings, at the expense of having less grass to cut and a couple of nearer neighbours.
Praying now that the planning will come through ok and the project can begin.
Think you've explored all your options? Maybe it's worth having a chat to be sure!