Bridging loans are short-term loan agreements. They can bridge the gap between buying a new property and receiving funds from the sale of an existing property.
Why would you need a bridging loan?
If you want to move to a new house, you may be relying on the sale of an existing house to provide some or all of the funds for the new one. You may not yet have a buyer for your existing home, or even if you have, they may be held up by the need to sell their existing property. A chain of buyers and sellers can build up, slowing down the whole process. Bridging loans can be the answer to breaking a house buying chain.
How a bridging loan could help?
An example could be a retired couple looking to downsize to a property valued at £300,000 who intend to use sale proceeds from their existing property valued at £500,000. The purchase needs to happen within 4 weeks, but they have not yet sold their existing property and so could miss out on buying their ideal retirement home.
The solution could be to arrange bridging finance of £300,000 against the existing property. Interest will accrue so no monthly repayments are required and repayment of the loan will come from the sale of the existing property.
Not just for residential property transactions.
Although the majority of bridging loans are used to complete house purchases, there are other reasons to use them.
purchasing a property at auction
landlords looking to expand their property portfolio
refurbishing or converting their property
Bridging loans can be very useful but are more expensive than traditional mortgages, so you need the right advice.
MAST Financial Services
17 High Street
0117 986 1637