Bridging Finance – The Ace Up Your Sleeve - August 10, 2018

From a chain breaking down to slow interest in the sale for property, bridging loans are the short-term funding option that many homeowners do not consider when everything appears to be lost. Often – and wrongly – thought to be the exclusive tool of property developers, a bridging loan should be a tool every homeowner can access should the need arise. Indeed, the ace up your sleeve.Clifton_bridge_Edit_1

Over the years bridging finance has become more and more popular with traditional homeowners when the timings between property sale and purchase do not always run parallel, most often plugging the gap between the new property purchase and the sale of the existing. A classic example would be a chain break: where a house needs to be purchased prior to the completion of the clients sale. Unlike a standard mortgage this type of loan is often spanned across two securities (usually the sale property and the purchase property) hence the term ‘bridge’.

As well as assisting a home mover this type of loan can be used by a someone who may wish to refurbish a property before quickly selling it on, fund a property bought at auction, or purchase a property that the high street banks will not finance.

The uses for bridging extend well beyond the remit of a purchase – if a client needs money for a tax bill, to purchase a piece of land, help with the cash flow of their business or perhaps put an extension on their home – we can help.

The key thing when looking at the plausibility of a bridging loan will be the exit strategy. This could involve getting a mainstream mortgage or a buy-to-let mortgage or indeed selling the property altogether.

Bridging loans have a reputation for being expensive – while it is true they are pricier than a mainstream mortgage the reality is they are a short term option. With rates starting from just 0.44% a month (5.28%) p/a it could be a lot better value than you thought!

What is undeniable is that bridging lenders come in all shapes and sizes. This ranges from smaller family lenders to large banks regulated by the Financial Conduct Authority (FCA). It is therefore essential to seek professional advice from a Directly Authorised  FCA-regulated broker such as One 77. Not only will we recommend the most appropriate product – but we will not charge you a fee for doing so. Can’t say fairer than that.

If it sounds like you need a bridging loan, or just some advice on any other alternative options to a property purchase quandary, then please call our Specialist Finance Department on 01249 474956 or fill out the form below and we will be in touch.

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