Bridging Loans

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    Bridge the Gap to Your New Home!

    In simple terms, a bridging loan is a short-term loan that helps you buy a new property before you’ve sold your current one. It’s super handy for avoiding the stress of property chains and securing your dream home quickly.

    Looking for a quick, flexible finance option to bridge the gap between buying and selling properties? Our bridging mortgage advisors in London and Streatham are here to help! Whether you’re a homeowner or an investor, we’ve got the expertise to guide you through bridging loans and specialty mortgages.

    Type of Bridging Mortgages

    Commercial mortgage rates are decided based on various factors, with lenders primarily focusing on specific criteria. it’s best to consult a mortgage broker for detailed advice. Following factors are some of the main considerations:

    Open Bridging Loans

    Open bridging loans are ideal for those who haven't secured a sale on their current property yet. They offer flexibility as there is no fixed repayment date, making them suitable for buyers who need time to sell their existing property.

    Closed Bridging Loans

    Closed bridging loans are perfect for borrowers who have a set completion date for the sale of their existing property. These loans come with a fixed repayment date, providing a clear timeline for repayment.

    First Charge Bridging Loans

    First charge bridging loans are taken out against a property that doesn't have any existing mortgages. This type of loan has priority over any other debts secured against the property, offering lower interest rates and potentially higher loan amounts.

    Second Charge Bridging Loans

    Second charge bridging loans are for properties that already have a mortgage. They are secured against the remaining equity in the property and typically have higher interest rates due to the increased risk for the lender.

    Purpose of Bridging Loans:

    1. Property Purchase

    Bridging loans are commonly used to finance the purchase of a new property before selling an existing one. This is particularly useful in a competitive market where you need to act quickly to secure your next home.

    2. Property Renovation

    These loans can provide the necessary funds to renovate or improve a property, either for personal use or to increase its market value before selling. This is ideal for property developers and investors looking to add value quickly.

    3. Auction Purchases

    When buying property at auction, full payment is usually required within a short period. Bridging loans offer a fast financing solution to meet these tight deadlines, ensuring you don’t miss out on a great deal.

    4. Business Opportunities

    Bridging loans can also be used for short-term business needs, such as covering cash flow gaps, funding new projects, or acquiring commercial properties. This flexibility makes them a versatile option for various financial situations.

    5. Chain Breaking

    In property transactions, delays in the chain can cause significant issues. A bridging loan can break the chain, allowing you to move forward with your purchase even if your buyer is delayed, providing peace of mind and continuity.

    Simple Steps to Your Mortgage Application

    1. Application and Approval

  • You apply for a bridging loan through a lender or broker, providing details about the properties involved, your financial situation, and the loan amount needed.,
  • Approval is usually quicker than traditional mortgages, often within days, due to simplified underwriting processes.
  • 2. Loan Terms and Conditions

  • Bridging loans are typically offered for terms ranging from a few weeks to up to 24 months, depending on the lender and your specific needs.
  • They may have flexible repayment options, allowing you to repay the loan in full at the end of the term or earlier if your existing property sells sooner than expected.

  • 3. Interest Rates

  • Interest rates for bridging loans can vary and are often higher than standard mortgages due to their short-term nature and the perceived risk.
  • Some bridging loans have interest that can be rolled up and paid at the end of the term, reducing your monthly outgoings.

  • 4. Secured Loans

  • Bridging loans are usually secured against property or properties, which can be your current home or the one you plan to purchase.
  • The amount you can borrow is typically based on the value of the properties involved and your ability to repay.

  • 5. Use Cases

  • Bridging loans are commonly used for purchasing property at auction, buying a new home before selling your current one, or funding property renovations to increase value quickly.
  • They can also be used for business purposes or to break property chains, ensuring you can proceed with your transaction smoothly.

  • 6. Repayment

  • You repay the bridging loan either by selling your existing property and using the proceeds to settle the loan or by refinancing with a traditional mortgage once the sale is complete.
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    Bridging Loan Or Mortgage FAQs

    Yes, bridging loans are commonly used for residential property purchases. They can provide quick funds to secure a new home before selling your existing one or to finance property renovations.

    Bridging loans are known for their fast approval and funding process. In many cases, loans can be approved within a few days, making them ideal for time-sensitive transactions.

    Yes, bridging loans can be used to avoid disrupting your existing mortgage. They allow you to secure temporary financing to bridge the gap between property transactions without having to immediately sell or refinance your current home.

    Interest rates for bridging loans vary depending on the lender, loan amount, and your financial situation. They are generally higher than standard mortgage rates due to the short-term nature and risk involved.

    Yes, there are typically fees associated with bridging loans, including arrangement fees, valuation fees, and possibly exit fees. It's important to understand all costs involved before committing to a loan.

    Yes, bridging loans often allow for early repayment. This flexibility can be beneficial if you sell your property sooner than expected or secure long-term financing through a traditional mortgage.

    Why Choose Gordon Blair Mortgage Brokers?

    Personalised Guidance

    Receive expert advice tailored to your unique financial situation.

    Access to Top Offers

    Gain access to a wide range of mortgage options and competitive rates from across the market.

    Step-by-Step Support

    We're with you at every stage, from application to completion and beyond.