Bridging loans

If you have found the property of your dreams and had an offer accepted, but are still waiting for your existing property to be sold, a bridging loan could be the solution to keep the deal on track.

But before you dive in you need to assess the best bridging loan offers on the market, which is where our experienced team of advisers can step in to help. They will guide you through the process in a transparent and professional manner in order to ensure you select an appropriate loan and one that you can afford.

Our regulated finance professionals will give you all the facts and figures, highlighting the all the potential bridging loan options available to you.

– Get advice before making home-buying decisions

– Loan applications processed with swiftly and efficiently

A bridging loan can be the ideal short-term solution to prevent you from wasting money already spent in the purchase process, as well as reducing stress. However, a bridging loan is not always the right solution for every applicant.

For house purchasers with an imminent transaction ahead of them but with delays in the sale of their own house they usually have two options, one is going ahead and taking another mortgage and the other is to set up a bridging loan. Of course this also usually means the borrower is paying off two loans at once, so our advisers will work with you to ensure you can afford the payments and to ensure you have the best chance of acquiring an affordable offer from a lender.

If there is a gap between the sale and completion dates in a property chain it can become difficult to deals together and a bridging loan may be the most suitable short-term finance typically available. This type of borrowing is also convenient for people buying properties at auction, or for buyers looking to renovate houses and quickly sell them on.

The demand for bridging loans has grown significantly in recent years in the UK, particularly in the South East of England where good property is at a premium, as buyers push to complete purchases as swiftly as possible.

Bridging loans are typically available with an arrangement fee of around 1% and an interest rate of about 0.5% to 1.5% per month. Sometimes exit fees of around 1% are also required, whilst certain lenders charge higher interest and lower arrangement costs. In some instances these fees can be deferred and added to a new mortgage.

In some cases it is better to take out a high loan-to-value mortgage instead of a bridging loan. You may be able to negotiate a mortgage with a short terms period or a loan which allows you to make a large extra repayment – once your old house is sold – without incurring a penalty, but high loan-to-value (LTV) mortgage finance is not always accessible.

Although bridging loans can be applied for directly most financial advisers recommend going via a broker to obtain the best deal.

Bridging loans are either ‘closed’ bridges or ‘open’ bridges. A closed bridge is for buyers who have already exchanged on the sale of their existing property, but still need financing due to delays in the property chain.

An ‘open’ bridge would be used by buyers who have found their new property, but have not yet agreed the sale of their existing home. The lender will usually ask to see the mortgage offer on the new property and may expect to see evidence that your current property is being marketed actively and realistically.

For any advice required on how to get a bridging loan from a lender, contact us today and our team will provide you with the most suitable solution.