Bridging Finance
A bridging loan typically takes less time to arrange and can be invaluable in helping with Auction Finance and other situations that require Quick, Short-Term funding with flexible income & property requirements.
If you are considering bridging finance be sure to take a look at some the factors that make this type a loan suitable in different situations. We included below some examples of common situations where a Bridging Loan might be the right option for you.
Speed
Faster processing times enable you to satisfy strict purchase deadlines for example auction purchases.
Flexibility
Bridging loans often have a more flexible property criteria, thus covering properties unsuitable for conventional mortgages.
Short-Term
Buy time to overcome the immediate hurdles and conduct the actions required to provide refinance or sell the property.
No Income Proof
Easier to qualify as many lenders concentrate on the value of the property than on your income.
Poor Credit
Bridging loans can be available to individuals who have had credit problems in the past but require short term finance.
- Many auction purchases in the UK require full payment within 28 days
- The property being purchased might not meet the property requirements of mainstream mortgage lenders
- Obtaining finance for a short period to carry out the works before remortgaging to a mainstream lender might help in enabling you to purchase a property at a lower price than you might otherwise been able to
- A Bridging loan can allow you to make the purchase of the property you have found as it is designed to provide "Fast Funding"
- The Sale of your existing property can be used to repay the bridge loan once the sale has completed
- This can help you to avoid jeoparding the purchase of your ideal house whilst avoiding the sale of your property at a lower price due to the pressure associated with the completion of your onward purchase.
- Bridging loans in such situations can be incredibly useful in enabling the purchase of a (potentially bargain) property which might be at a lower proce than if it was in a condition to meet the property criteria for mainstream lenders.
- Sourcing a lender that will consider the property in its current state will allow you to make the purchase
- Once you have bought the property through a bridge loan, you can carry out the works to get the property in the right state for it to considered by a conventional mortgage lender, thus making it more appealing to prospective buyers who want to make the purchase through a mainstreram lender.
- With the works being completed and the property now meeting the requirements of mainstream lenders, a remortgage to a mainstream lender can now take place.
- Due to the property meeting the security requirements for a greater pool of lenders, if your goal is to sell the property then it might now be able to command a higher price than what you purchased it for.
- Could be useful especially if a property has been sourced at a "Lower than Market Value" price due to the condition of the property itself and the aim is to bring the condition to a level whereby a better price can be commanded if certain works are carried out on the property.
- Fast, Short term funding when there is no requirement for a length mortgage term or to avoid being tied in to a conventional mortgage.
- The term can be set in accordance with the time that is deemed to be suitable to carry out the home improvement works
- Income crtiteria is flexible, as many lenders will lend based on the loan size against the value of the property.
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Some Important Points
A bridge loan typically takes less time to arrange, however, it is not always the most cost-effective solution. We will use our knowledge and expertise to ensure that all avenues have been explored before recommending a bridging loan. If it is the correct solution based on your circumstance and there is a clear exit strategy in place, then we will be happy to advise & recommend a suitable bridging product that will assist you in meeting your goal.
