Commercial bridging to mortgage: what are the rules?

THE QUESTION

If we use bridging to buy a commercial unit, does the six-month rule apply before we can apply for a mortgage?

THE ANSWER

This an ownership restriction, not a purchase restriction.

If a mortgage lender chooses to invoke a clause that says you must own the property for six months before they will accept an application to remortgage, then they apply it regardless.  It doesn’t matter what funding you used to buy the property, cash, bridging, a joint venture or something else.

The point is, not all lenders choose to invoke such a clause.  So, again regardless of how you finance the purchase, use one of these lenders and you can refinance whenever you like.

It’s wise to be aware that a few, but not all, lenders will only refinance at the purchase price you paid.  If you are trying to recycle your cash out of the property, you need to be particularly selective when choosing the lender you use.

Buying in your own or a Ltd Co, name will also influence your choice of lender.

Lenders who invoke this clause mostly tend to lend on residential properties only.  If you are buying a commercial property it is far less likely to apply.

If it sounds complicated, it isn’t – as long as you use a broker to research and source suitable lenders for you.  We can do this for you if you wish.

You can learn more here:

• Contact Kevin Wright over on his Facebook page.
• Browse the Recycle Your Cash online training library by clicking here.
• Attend an upcoming 1-Day Property Finance Masterclass event - Book in here.