Bridging loans are commonly used as a short term finance solution when buying and selling properties. Also known as bridging finance, a bridging loan helps to support the moving process by assisting buyers to purchase a new property while awaiting the sale of their existing property.
A bridging loan provides a short-term funding option that 'bridges’ the gap between an outgoing payment and money coming in. They help people complete the purchase of a property that would otherwise not be possible, for instance if there is a break in the property sale chain, or when there is a high market demand and properties are selling quickly. They can be organised quickly, in the matter of weeks in some cases, so they offer a viable solution for raising funds quickly.
Sometimes there are reasons why purchasers may need to buy their new property before the sale of their existing property has gone through. In order to do this bridging finance could be used to ‘bridge’ the short-term shortfall in their finances. Bridging loans can also be used as a short-term loan, for relatively large amounts of money, for a range of other circumstances.
For landlords and property developers, bridging loans can be utilised when buying a commercial or residential property at auction. Due to the property needing to be paid in full within a short space of time, the loan allows them to complete the purchase whilst the mortgage is being arranged.
For ‘unmortgageable’ properties, bridging loans can also be used to make them habitable, and worthy of a mortgage. Other reasons include:
It can be a tricky process finding a suitable bridging loan for your needs. There are multiple bridging lenders out there, each one coming in a different shape and size. Due to the vast amount of options, it is advisable to use an FCA-regulated broker, to help find you the most competitive deal for your circumstances.
Contact Transparent Mortgage Services to discuss your needs and we will find the best deal for you, or advise you on alternative finance sources that might represent a more affordable option.
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Bridging loans are popular due to how quickly they can be arranged. Once we have found the best bridging loan for your circumstances your application can be approved in less than a day. Following this, the funds can be with you in less than two weeks.
The interest on bridging loans are charged monthly, although it is possible to pay it in a single sum at the end of the loan in some cases. You can borrow up to the amount of £5 million pounds and depending on your own equity, the amount will generally be capped at 75% of what you’re securing it on. You also have the option of securing the loan against multiple properties in order to gain adequate financing and unlike a mortgage it is not income based.
Bridging finance offers a short-term borrowing solution, enabling you to access money quickly. These types of loans are typically provided over the period of a year, or under, however, some longer terms may be available.
Transparent Mortgage Services are independent brokers based in the heart of Sussex. We work with clients across Brighton and Hove and the surrounding Sussex area. For advice on bridging finance or any mortgage or financial products please contact our friendly team today.
