In recent years, rising property prices and interest rates have made it more difficult to get onto the property ladder. Indeed, according to Uswitch, the
In recent years, rising property prices and interest rates have made it more difficult to get onto the property ladder. Indeed, according to Uswitch, the
Bridging loans are designed to help borrowers financially ‘bridge the gap’ when borrowing a large amount of money, as a short term solution.
Bridging loans, also referred to as bridge loans, are a type of short-term loan taken out when you want to borrow a significant amount of money over a short period of time.
As a type of secured loan, bridging loans require an asset to be secured against them. In most cases, this asset is one property, but could be several properties, especially when borrowing larger sums.
Typically, bridging loans in the UK are taken out by landlords, homeowners, and property developers, and are used for either buying a home, property investment, or property development.
Usually, these loans are paid back over a matter of months, not years, as they’re often used while the borrower is waiting for funds to be made accessible from the sale of something else.
There are two types of bridging loans – open bridging loans and closed bridging loans. Open bridging loans have no fixed repayment date, while closed bridging loans do.
With an open arrangement, the lender normally wants the debt to be paid in full within a year, while closed arrangements have a fixed repayment date depending on when the borrower expects to have the funds to repay the loan.
What are the benefits?
What are the risks?
You’ll need to secure it against a property. You should know how much the property is worth, if it has a mortgage, how much equity is in the property, and what your monthly income and expenditure looks like.
Lenders will want to ensure you have a clear exit plan, that illustrates how and when you’ll repay the loan. Working alongside an accountant and broker can help determine what this schedule looks like.
A mortgage advisor can provide expert advice regarding the market and bridging loan rates which can help you to achieve a suitable rate. Book your free UKMC consultation today.
What Is The Criteria To Apply?
You must be able to provide a property or other asset as collateral for the loan.
You need a clear plan for repaying your loan. This could be the sale of an existing property or securing long-term finance.
There should be enough equity in the property, or the asset used as collateral to cover the loan.
A good credit history will improve your chances of approval.
You may be asked to show proof of income to demonstrate your ability to manage interest payments until you have repaid your loan.
Find expert guidance, and all the information you need to make informed decisions on your path to homeownership.
UK Mortgage Centre Limited is an Appointed Representative of Refresh Mortgage Network Limited. Refresh Mortgage Network Limited is authorised and regulated by the Financial Conduct Authority. We are entered on the Financial Services Register under firm number 1019794.
As a mortgage is secured against your home, it could be repossessed if you do not keep up the mortgage repayments. The Financial Conduct Authority does not regulate some forms of buy-to-let mortgages.
The Financial Conduct Authority does not regulate will writing and taxation and trust advice.
You may be charged a fee for your advice. A typical fee is £495, which would be payable when you receive your mortgage offer. Your dedicated advisor will discuss this further on your free initial phone call.
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