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Bridging finance for your main residence?

bridging finance Jul 10, 2019


Can you get bridging finance on a house you want to live in? 

I’ve found a 7-bed detached house that looks like it’s been converted into three flats - I suspect without planning permission as it’s advertised as ‘Cash buyers only’, 

I have some development experience and could afford it on my income with a mortgage when appropriate.  I have access to a fifth of the purchase price in cash today and own a rented property outright which I intend to use as equity for future developments. 


Yes, you can get bridging for a house you want to live in, it is FCA regulated bridging, which means the lender has to have been approved by the FCA to lend on a main residence.  This rules out all but a handful of bridgers, because the rest have decided it’s too costly and too involved for what is a tiny percentage of the bridging market. 

An FCA bridger is duty-bound to take greater care with your application and they will need to ensure you have the ability to get a mortgage sufficient to repay them before they will agree to lend.

Buying the property you describe presents additional obstacles you will need to overcome:

  1. Properties converted into flats without the required planning permission are unmortgageable.  Mortgage lenders won’t touch them until you have retrospectively got the required planning approval - that's why you need bridging.  That will also be why it is being marketed to cash buyers only, it’s not mortgageable.
  2. Assuming you buy it, then get retrospective planning permission you will still need to address the issue of title.  No mortgage lender will give you a mortgage on a property converted to flats on a single title. They only lend on single, not multi, units.  So you need to decide what you want to do with it when you buy it, because you won’t get a bridging loan on it until you can show them how you will repay them.
    1. Convert it back to a 7-bed house, this would then meet main residence lenders’ criteria
    2. If you intend to keep it as flats you will find it easier to buy in a Ltd Co name, get planning, split the title to create three leases leaving the freehold in the Ltd Co name.  One of the leases will be in your name and you can then get a main res mortgage on the flat you want to live in and rent the other two out. It would be simpler to get a commercial mortgage for the Ltd Co that owns the freehold and the other two flats.

If you can buy this property at a price that allows you to create a good uplift in value (you should do, as the seller will know that a conversion without planning permission is going to go at below full market value and will take offers), it will make it easier to mortgage at the back end.

A bridger will let you put up your unencumbered property instead of needing to put down a cash deposit.  You can then keep the cash you have to fund the works required to the property.

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