Bridging loans for short term leases

If the short team lease is unacceptable for a mortgage then you could take a short term bridging loan to acquire the property and then extend the lease. Once the lease is extended you can then either sell the property for a profit or re finance with a mortgage lender who would now accept the property with the lease extension.

How does a bridging loan work?

A bridging loan is a property backed short-term loan, usually funded to bridge the gap. Reasons why you might use a bridging loan is when you’re at an auction and you need to purchase a property in auction and you need speed, or it might be that you’re waiting for another event to occur i.e you’re moving from your home to another home and you don’t want to be in a chain, or you might have found an under-valued property and you don’t have a deposit to hand so you want 100% finance. That is all available through a bridging loan.  

Is it worth buying a property with a short lease?

Are you considering purchasing a property with a short lease? It’s a decision that requires careful consideration, as it can have significant implications for your long-term investment. In this article, we’ll explore the pros and cons of buying a property with a short lease and provide advice when purchase a property with a short lease. 

Pros of Buying a Property with a Short Lease:

• Lower Initial Cost: Properties with short leases often come with a lower upfront cost compared to those with longer leases. This can be an attractive option for buyers looking to enter the property market with a limited budget.
• Potential for Negotiation: Short lease properties may offer room for negotiation, allowing you to secure a better deal on the purchase price. Sellers may be more willing to lower their asking price or cover certain expenses.
• Opportunity for Lease Extension: In some cases, you may have the option to extend the lease, either through negotiation with the freeholder or by exercising statutory rights. This can provide long-term stability for your investment.

Cons of Buying a Property with a Short Lease:

• Reduced Marketability: Properties with short leases are typically less attractive to potential buyers. This can make it difficult to sell the property in the future, potentially resulting in a lower sale value.
• Limited Financing Options: Securing a mortgage for a property with a short lease can be difficult, as many lenders have stricter criteria for such properties. This can limit your financing options.
• Uncertainty and Risk: Short leases introduce uncertainty, as you may not know whether the lease will be extended or how much it will cost. In some circumstances it can be difficult to locate the freeholder and get a response.