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THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP THE PAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT. 

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Bridging Loan Example, Bridging loans & finance offer short term financing solutions for lenders who wish to obtain a loan by offering a property as security for the loan, unlike a personal loan you will need a property to offer the lender security for their cash, these loans are only ever for a short period of time with most being offered over a 12 month period, after which the loan will need to be either extended for up to six months or paid back, although often you can re-bridge to pay back the original lender and the loan taken out for another 12 months, Bridging Loan Examples are as follows.

 

Example 1

 

You need to buy a property but have yet to sell your own.

 

The property Purchase price is £300,000, your mortgage outstanding is £100,000 and the property you wish to purchase is £500,000 you combine the two property values giving a total of £800,000, you would then take a bridging loan for £600,000 which would clear the outstanding mortgage on your property and pay the £500,000 for the one you wish to buy, this would be outstanding until you sell and then use the proceeds to clear the bridge and then take out a traditional mortgage for the balance.

 

Example 2 

 

You need to get cash quickly for an unexpected bill or you need short term funding to help with a business project or cash flow, you have a property worth £500,000 with a mortgage of £100,000 and need to get £100,000 in short term funding, you can get up to 75% loan to value so a bridging loan lender would actually advance you up to £300,000 this the £500,000 less the outstanding mortgage of £100,000 is 75% of £400,000, this would be for up to 18 months and you would be required to tell the lender how you intend to repay the loan.

 

Example 3.

 

You see a property at auction that you want to buy, because auction properties have to be paid for with 28 days of the auction, the only option would be a bridging loan, of up to 75% of the auction price so if the property was £500,000 you can borrow £375,000 against the valuation, this would then be repaid upon sale of the property or by a refinance with a longer term loan, mortgage or resale of the property.

 

These type of finance are used to either purchase property or often to get a loan from the equity that you have in a property that you already own, often this is because the borrower cannot access cash quickly from another source or that they have a poor credit history, examples of how these loans are used would be as follows.

 

Buying a property before you have sold.

 

Often you see a property that you would like to buy and you have either not sold yours or even started to market it, this type of bridging loan could be used to get access to capital quickly so that you can buy the property and then arrange a mortgage after you sell.

 

A broken property chain.

 

When you are in a property chain and one or more of the buyers or sellers pull out unexpectedly, the whole chain can fall apart meaning no one can complete the transaction a bridging loan can help restore the chain and allow all of the sales to complete

 

Buying a property that you cannot get a mortgage on

 

Often mortgage lenders refuse to lend on properties that are uninhabitable, due to poor condition, Bridging Companies are not so concerned about this and will just lend against the bricks and mortar value, this allows you to make the purchase and then but right the faults, after which you would obtain a traditional mortgage.

 

Top 10 Finance are one of the UK’S leading bridging loan brokers and can search all of the loans on the market to source the perfect deal for your circumstances.

 

Contact us now to discuss your proposal and we can assure you of the very best advice and service, call us now 0800 138 6001 or use the contact form on this page to compare loans.

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