As an investor, you’ll agree that timing matters a lot when it comes to investing in properties today. Whether you’re looking to finance a refurbishment project or looking to purchase a property, having access to secure, fast, and flexible finance is essential. Here’s where the need to consider no valuation bridging loans comes into play.
But here’s a quick question: are bridging loans worth the hype for property purchases and projects? With this guide, you’ll find everything you need to know about this question, including why choosing Aura Capital for your bridging finance is worth it today.
Understanding how no valuation bridging loans work for property purchases
Before talking about the benefits of going for a no valuation bridging loan product, let’s start by understanding how these loans work. Bridging loans are short term loans which are designed to help investors and home owners gain access to funds quickly and provide more flexibility than a conventional mortgage when it comes to moving house, refurbishments and development projects.
Why No Valuation?
Typically, obtaining a traditional mortgage or bridging loan requires an in person property valuation by an RICS surveyor, which can take several days, weeks, or up to a month for more large complex cases. This process often adds unexpected delays and costs, particularly in low LTV scenarios, where a valuation may seem unnecessary and burdensome.
What if you need to purchase or refinance a property quickly?
Traditional mortgages and standard bridging loans are often not suitable for time-sensitive property transactions. When speed is essential, a no valuation bridging loan emerges as the preferable choice. This option eliminates the need for a lengthy valuation process; instead, you simply provide the required information about yourself and the property, allowing for offer approval within 24 hours. However, the trade-off is the cost. According to Aura Capital’s internal research, no valuation bridging loans typically carry higher interest rates, making them 5-10% more expensive. Despite this, they remain among the most sought-after loan options at Aura Capital.
Benefits of choosing no valuation bridging loans for property purchases
Below are a few reasons why going for bridging loans without property valuation is worth it:
- No delays due to property valuation—this is the primary advantage of this type of bridging loan. As you know, the property valuation process involves several steps: the lender instructing the valuer, scheduling a property visit, writing the valuation report, returning it to the lender, and undergoing the lender’s internal valuation review. This entire process can, at best, take days or even weeks, which is not suitable for time-sensitive property deals. Delays can result in missed opportunities or lost deposits. In such cases, opting for no valuation bridging loans from Aura Capital is your best bet, allowing access to funds within just 1 to 2 days.
- Faster processing—nothing beats getting access to your loan quickly. No valuation bridging loans can be assessed through Aura Capital as quickly as 24 to 48 hours. This is possible because these loans not only require less paperwork, have faster processing and underwriting and are typically prioritised by the lenders. This means you won’t have to wait for a longer period to access funds for property purchases.
- Choose a bridging loan with no valuation for auction purchases. As experienced investors know, auctioned properties often come with the best deals. These properties are often sold below market values. However, for you to access these discounted properties, you need access to capital within the 28 day closing period. With no valuation bridging loans, you have the best chances of securing these properties within their deadlines.
Are there risks associated with these bridging loans?
No valuation bridging loans can provide rapid access to financing, which is beneficial for property investors and home buyers. However, these loans also come with risks that borrowers should carefully consider.
- Inaccurate Property Valuation: By opting not to obtain a formal property valuation, there is a risk that the asset may be overvalued or undervalued. Furthermore, a “zero” valuation may arise if the property fails to meet the lender’s criteria or if additional information is required, potentially complicating the borrowing process.
- Insufficient Due Diligence: The decision to forego valuation products may indicate a lack of thorough property due diligence. This oversight can result in unforeseen issues with the property that might not be identified until later, impacting the borrower’s ability to repay the loan. Conducting comprehensive due diligence and research is essential to mitigate this risk.
- Misalignment of Interests: Borrowers and lenders often have different expectations regarding the property’s value. The absence of a formal independent valuation can create misalignment, which may lead to conflicts during the loan term. Engaging with a bridging and development finance broker, like Aura Capital, can be instrumental in navigating and resolving these issues, ensuring that both parties are on the same page.
You can visit Aura Capital to better understand how to secure the best no valuation bridging loans in the United Kingdom today.