Bridging Loans

Bridging Loans

Bridging Loans: A Short-Term Solution for Property Needs

A bridging loan, often called a bridging mortgage (though technically different from a traditional mortgage), is a short-term loan designed to “bridge the gap” in your finances. It provides a quick injection of cash, typically for a period of 1-12 months, to help you complete a property transaction.

What is a Bridging Loan?

Imagine you’ve found your dream home, but selling your current property takes longer than expected. A bridging loan can step in, allowing you to purchase the new property before selling the old one. The loan is secured against your existing property, meaning you use its equity as collateral. Once your current property sells, you use the proceeds to repay the bridging loan.

Here are some other situations where bridging loans are helpful:

  • Buying at auction: Auctions often require a quick turnaround, and a bridging loan can help secure the funds.
  • Renovation projects: If you need to buy a property that requires renovation before selling your current one, a bridging loan can finance the initial work.
  • Property investment: Investors might use bridging loans to purchase properties with potential but needing repairs before resale.

Who Can Get a Bridging Loan?

Bridging loans aren’t for everyone. Here’s who might be a good candidate:

  • Property owners with significant equity: Lenders typically allow you to borrow up to 75% of your existing property’s value.
  • Strong financial position: You’ll need to demonstrate a good credit history and the ability to repay the loan within the short timeframe.
  • Clear exit strategy: Lenders need to be confident you have a plan to repay the loan, such as the confirmed sale of your existing property.
bridging mortgage

How to Apply for a Bridging Loan?

Bridging loans are a specialist product not offered by high-street banks. Here’s how to apply:

  • Research lenders: Several specialist bridging loan lenders exist in the UK. Compare interest rates, fees, and loan terms.
  • Speak to a bridging broker: A broker can help you find the best deal and navigate the application process.
  • Prepare your application: Lenders will require detailed information about your financial situation, the property involved, and your exit strategy.
  • Valuation and legal fees: Expect to pay for property valuations and legal fees associated with the loan.

3 Advantages of Bridging Loans

Excellent
Based on 52 reviews
Georgiana Olescu
Georgiana Olescu
2024-04-10
Trustindex verifies that the original source of the review is Google.
Paul is an amazing broker, very helpful, responsive to emails and patient with customers. The process with him was quick and easy as his work ethic is impeccable. We are beyond impressed and happy with his services and that we got to work with him.
Valerie O
Valerie O
2023-12-28
Trustindex verifies that the original source of the review is Google.
Exceptional service provided by Paul, I could not have asked for better. Definitely does his due diligence and goes above and beyond. Highly recommended!
Bonnie Frost
Bonnie Frost
2023-12-25
Trustindex verifies that the original source of the review is Google.
Paul is a fantastic advisor and guided my husband and myself through the entire process of buying our first home, he made the entire process feel easy and we were well informed along with great communication and fast action. We completed within 3 months of contacting Paul.
Johnathan Lowery
Johnathan Lowery
2023-11-16
Trustindex verifies that the original source of the review is Google.
Working with Paul has been a hugely positive experience. Paul took the time to understand our needs and financial situation, ultimately securing us a mortgage deal that we would not have been able to obtain on our own. His guidance and patience over an extended time was invaluable in guiding us through a volatile period in the property market. I highly recommend working with Paul at Your Property Financial.
Adeel Sarwar
Adeel Sarwar
2023-10-02
Trustindex verifies that the original source of the review is Google.
It has been great working with Paul. He helped us to redeem our help to buy equity loan which didn't seem possible to me when I first contacted him. It took much longer than expected due to many obstacles but Paul explained every step of the process very clearly and he regularly communicated with me to ensure the remortgage went through as efficiently as possible. I would definitely recommend working with Your Property Financial.
Jessica
Jessica
2023-08-29
Trustindex verifies that the original source of the review is Google.
I would highly recommend Paul as a mortgage broker. As a first time lone buyer I began the process feeling very out of my depth, particularly in a market where mortgage rates are very high. But from the get go Paul provided reassurance and practical guidance and has been immensely helpful throughout the process. I've really appreciated his responsiveness, honesty and support.
Louise Griffiths
Louise Griffiths
2023-08-28
Trustindex verifies that the original source of the review is Google.
I reached out to Paul 2 years ago and giving this review now because I wanted to ensure that I could give a true review of what benefits I have experienced from using his service. I am thrilled with the financial expertise given to me by Paul. His skillful negotiation secured me an excellent mortgage rate within a short turn around time. This has not only set me on the path to paying off my principal balance but has also allowed me to simultaneously build a solid emergency fund. His initial guidance has been invaluable in shaping my financial future. I look forward to working with Paul again, once my 5 year plan is near its end. Highly recommended!
Calum Hebron
Calum Hebron
2023-08-05
Trustindex verifies that the original source of the review is Google.
Paul has been consistently excellent, ensuring we got the best possible mortgage deal at a time when rates weren't great. Paul worked with us to understand our financial complexities and went above and beyond to ensure they were understood by mortgage providers. We've been made to understand every stage of the process, and as first time buyers we were able to feel confident in the decisions we made. I would highly recommend working with Paul at Your Property Financial.
Czarina
Czarina
2023-08-04
Trustindex verifies that the original source of the review is Google.
My almost a year-long journey with Paul as my broker has been truly amazing, despite a few hiccups during the mortgage process. Working with him has been the best decision ever! As a first-time buyer, I lacked knowledge about purchasing a home, but Paul's guidance and expertise were outstanding. He explained things in a clear and concise way. What impressed me the most was Paul's responsiveness. He promptly addressed all my questions and concerns, never making me feel like a bother. Even when I faced challenges, Paul's determination and problem-solving skills were unwavering. I felt so supported throughout the entire process. Thanks to Paul's unwavering support, I managed to reach this point. I highly recommend him to anyone, especially fellow first-time buyers. Paul's knowledge, patience, and reliability are unmatched. He's not just a broker; he's an invaluable ally in this complex process. Thank you, Paul!
Alistair Prestidge
Alistair Prestidge
2023-07-11
Trustindex verifies that the original source of the review is Google.
Paul helped me to get my Mortgage approved in less then 48 hours! He has been great and I can’t recommend him highly enough. His communication is excellent, and he helped me understand each stage of the process easily. Thank you so much for helping me buy my very first home! I will most certainly be recommending Paul to friends & family!

Important Considerations

Bridging loans comes with significant drawbacks:

  • High interest rates: Bridging loans typically have much higher interest rates than traditional mortgages.
  • Short repayment terms: The short repayment period can put pressure on your finances if you struggle to sell your existing property.
  • Risk of losing your home: If you can’t repay the loan, you risk losing the property used as collateral.

Alternatives to Bridging Loans

Before opting for a bridging loan, consider these alternatives:

  • Extend the completion date on your purchase: Negotiate with the seller of the new property for a later completion date, allowing you more time to sell your current one.
  • Sell your existing property first: This might take longer, but it avoids the risks and costs associated with a bridging loan.
  • Explore a chained sale: This involves finding a buyer for your current property who is contingent on selling their own. However, this can be complex and prone to delays.

Conclusion

Bridging loans can be a valuable tool in specific property transactions. However, due to the high costs and risks involved, a careful assessment of your financial situation and exit strategy is crucial. Consider exploring alternative options before committing to a bridging loan. It’s also essential to use a reputable bridging broker to secure the best possible terms and navigate the complex application process.

Making Your Bridging Loan Journey Smooth

Complete your details below and we’ll be in touch to help you with your enquiry

Contact Us