Bridging finance can help capitalise on profitable opportunities when planning is obtained for additional properties in your garden

A popular and often very lucrative opportunity is gaining planning permission for one or more additional properties on a portion of the land that makes up an existing property’s garden. Once the planning permission has been obtained the owner can either sell the plot, or plots, for development or build on the land for themselves. Deciding to build will often mean that finance is required to fund the project and this can be raised through the use of property development loans or bridging finance.

Even if the building plots are to be sold then there may still be a requirement for some finance. This would typically occur if there is already a mortgage facility on the property, likely to date back to when the property was originally purchased or a time when the property was remortgaged. An existing mortgage facility will most likely be secured on the original property and land, so to split the building plots so that they are on their own set of deeds will require the permission of the existing mortgage provider.

Mortgage providers are not always that cooperative and may refuse any request to give up some of their security, or may indeed agree to do so, provided some of the outstanding balance is repaid to compensate them for effectively agreeing to take less security for their loan. However, sometimes the ways in which the mortgage providers want to achieve this isn’t always convenient. Indeed it may be that once the plots are sold, or have been developed and sold, it is the intention of the owner to clear the existing mortgage completely from the proceeds received from the sales. Alternatively the owner may want to rent the properties out, so intends to raise buy to let mortgages in order to repay any development or bridging finance.

When it is impossible to move forwards with this sort of development due to awkward mortgage providers, a possible option can be bridging finance. The funds raised from bridging finance can be used to clear any existing mortgages and can also fund any other work that needs to be carried out, for example putting in the services, in order to enable the sale of the plot or plots. If looking to develop the sites for them self, a bridging loan can also provide the funds required to pay for the development. At the end of the development the properties would be sold or refinanced in order to repay the bridging loan. Alternatively development loans can be used to fund such projects.