If you want to buy a property but are yet to sell your current home or need a short-term cash boost while waiting for longer-term funding, a bridging loan could help you "bridge the gap". A bridging loan will quickly give you the funds you need until you're able to sort out alternative funding arrangements.
A bridging loan is a short-term financing arrangement (typically 12 months or less) that provides an immediate cash boost.
A bridging loan can be helpful if you’re buying a property yet waiting for the sale of an existing one to go through or for a mortgage to complete. In this instance, you could use the bridging loan to secure your new property and keep the chain together. Then, as soon as your property sells or your mortgage comes through, you can repay the bridging loan.
Other times that bridging loans prove beneficial include:
• You’re buying a property at auction with short completion deadlines
• You’re purchasing a property below market value and require a quick completion
• You want to release equity from your property on a short-term basis
• You want to buy a property that mainstream lenders deem unsuitable for mortgage purposes but plan to refurbish it
A bridging loan is a secured loan, meaning that you have to secure an asset against it, usually a property. Generally, bridging loans are flexible and quick to obtain. However, they tend to come with higher interest rates, and because they’re a secured form of borrowing, you risk losing that asset, for example, a property, if you can’t repay the bridging loan.
A bridging loan broker can advise on the risks, access deals that aren't available by going directly to a lender and find the right deal for you.
Because we play by the book we want to tell you that...
Your home may be repossessed if you do not keep up repayments on your mortgage.
There may be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances.
The fee is up to 1%, but a typical fee is 0.3% of the amount borrowed.