Exploring options for property bridging loans available in the UK. Independent advice from experts. Find the best deals now.

Property Bridging Loans – Fast, Flexible, & Expensive

Property Bridging Loans are a form of secured finance, borrowed against existing property or asset ownership   They provide buyers with a short term solution where a sale of assets may be slow to process or where other kinds of funding may not be an option.  They typically last for up to 18 months. 

The amount repaid on the loan will depend on for how long it is needed.  Fees are added to the loan and interest is calculated monthly.  There aren’t usually any monthly repayments.  The interest and fees are added to the amount owed and tied up with the amount that you pay at the end of the loan period once you have sold either the ‘asset’ that is secured against the loan, or the property itself.  

For the client this means that a Property Bridging Loan may be more flexible than other forms of borrowing.  It also means that the loan is more expensive – especially if it is required for a longer period of time than originally envisaged.  

Property Bridging Loans for Home Purchases

There are certain kinds of circumstances where an individual may require a Property Bridging Loan in order to purchase a domestic property. 

When you find your dream property you may need to move fast or lose it.  Property chains are notoriously problematic and sometimes sales of existing property can take longer than you think. Bridging loan finance can help to ‘bridge’ the gap between buying the new home while waiting for the sale of your previous home to go through.

Using Bridging Loans to Purchase a House

Sometimes you will find that normal mortgages are just not suitable for your circumstances.  

For example, different rules apply to the process of purchasing a property at auction.  Firstly, the auction house requires the payment of an immediate deposit (usually 10% of the sale price), after which the buyer has a very short time to complete – 30 days is most common.  A property bridging loan could provide ‘breathing space’ while you get your affairs in order so that you don’t miss out.

If you wish to buy a property which requires work to make it habitable, then you may find that conventional mortgage companies won’t lend the money that you need to ‘do it up’.  Most banks are reluctant to loan money to buy a property that is uninhabitable or where substantial work is required to make it structurally sound.  A property bridging loan can be used to purchase the property and make the necessary repairs so that you can then apply for a conventional mortgage on the property later on. 

Property Development Bridging Loans for Purchase and Development

The key to making money from real estate and property development is to buy low and sell high. 

In order to ‘flip’ a house and maximise your returns many property developers will look for ‘bargains’ in the marketplace where they know they can add value in a short period of time.  A Property Bridging Loan can be the quickest way to take advantage of opportunities to buy under full market value.  For example, when someone needs a quick sale, or where a bank is trying to offload a re-possessed property.

You may also find land or other kinds of real estate at auctions where you need to have funding secured in a short period of time.  Bridging loans are a perfect solution in these situations.

Use a Broker to Take the Stress Out of the Process

Applying for a Property Bridging Loan can be a stressful experience so you may wish to involve a broker to help you through the process.  Our brokers can advise and support you to take the pain away and make sure that you get the best kind of lending for your circumstances.

Unlike many conventional mortgages, lenders deal with each application on an individual basis and take account of any specific or unique circumstances. The lender will assess the risk and make a decision based on whether they believe their money is secure or not.  It is important to be honest and upfront and to provide as much detail and information as you possibly can.   This is where we can help the most to ensure the process is as worry-free as it can be.

If you are considering any kind of bridging finance, then be sure that you understand all the terms and conditions involved with this type of lending.  Check out all the fees involved and have a back-up plan just in case your sale falls through. You can be sure that our Advisors will always be upfront with you and talk you through any potential pitfalls and will always offer you sound, professional advice.