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BRIDGING LOAN
Whether you’re buying a property at auction and need to seal the deal quickly, or you’ve found a new property whilst you’re waiting for another one to sell, we can help.
Allow us to bridge the gap in your finances with a specialist bridging loan. We know that time is of the essence when it comes to this type of loan – so we’ll endeavour to arrange one as quickly as possible for you.
We can obtain secured bridging loans from a range of providers and most are flexible. This means that you may be able to borrow the amount you need over a couple of months up to two years if necessary.
What are Bridging Loans?
A bridging loan is when you want to borrow money from the lenders over a short period, it is often used to bridge the gap when wanting to buy a new home before your old home is sold or if your planning to buy a house from auction and you need the money ASAP because your older house hasn’t sold yet.
How bridging loans work?
There are two types of bridging loans, called closed and open. With a closed loan, there is a fixed repayment date – you will normally be given this kind of loan if you have exchanged contracts but are waiting for your property sale to complete.
With an open loan, there is no fixed repayment date, but you will normally be expected to pay it off within one year.
Whichever kind of loan you take out, the lender will want to see evidence of a clear repayment strategy, such as using equity from a property sale or taking out a mortgage. They will also want to see evidence of the new property you are purchasing and the price you plan to pay for it, as well as proof of what you are doing to sell your current property if relevant. You should also have a back-up plan in place in case your repayment strategy fails.
How much does a bridging loan cost?
Bridging loans are priced monthly, as people tend to take them out for a short period. Bridging loans can be expensive, facing fees of between 0.5% and 1.5% per month, making it much pricier than a normal residential mortgage. There are also set-up fees to consider, usually around 1% of the loan you want to take out, so it is advisable to only take a bridging loan out if you are confident that you won’t need it for a long period of time.
How much can you borrow with a bridging loan?
In cash terms, bridging loan providers might lend anything between £25,000 and over £25m. But you’ll usually only be able to borrow a maximum loan-to-value ratio (LTV) of 75% of the value of your property.
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