Eden Upton

Eden Upton

Eden Upton writes articles and press releases for mortgages, auction finance, repossession and bridging loans. His publications have received starred reviews in Real Business, Business Matters, The Good Men Project and Global Finance. Before he started writing finance, Eden wrote for big brands such as djkit.com, NHS, Nando's and Boots. His passion for writing finance grew when he started researching the bridging and mortgage industry for UK Property Finance and sourcing the best rates, finding the best deals online for homeowners.

Bridge the Gap to Own a Holiday Home

The housing situation for most would-be buyers in the UK right now is pretty bleak. Particularly for first-time buyers, millions of whom face the prospect of never owning their own home.

But what’s interesting is how, at the opposite end of the spectrum, individuals interested in buying second homes (or holiday homes) are increasingly setting their sights overseas. Given the inevitable complications of buying abroad, why are there more Brits than ever before considering international property investments?

The overseas property market

For most, the primary motivating factor is affordability. In some regions, average property prices have plummeted by as much as 70% over recent years alone. As a result, Brits buying abroad are able to make their budgets stretch considerably further than they would at home.

What’s more, the desire to snap up bargain properties while the opportunity exists is prompting a growing number of borrowers to consider more immediate short-term loans.

Florida has become an appealing investment prospect for more British homebuyers than ever before. Primarily due to sub-prime issues, average house prices in several attractive regions across Florida have fallen by more than 70%. Over in Spain, research suggests there are currently more than 700,000 unsold holiday homes, which are plummeting in value all the time. In addition, average house prices in several key coastal regions have fallen by around 50%.

For some, the appeal lies in the prospect of purchasing an attractive overseas property to let out. For others, it’s a case of being able to pick up a dream holiday home at a bargain price. Or perhaps a second home to eventually move to for permanent residence during retirement.

No matter how extensive or limited their budget may be, would-be buyers are finding overseas investment opportunities near irresistible.

Local mortgage complexities

One of the biggest obstacles standing in the way of overseas property ownership tends to be arranging finance. For obvious reasons, getting a local mortgage from an overseas lender can be far more complex than organising a mortgage at home. Lending criteria and eligibility in general differ significantly from one lender to the next, as do interest rates and borrowing costs.

For most, it’s a case of hiring a local lawyer and/or real estate expert to represent them in their absence. All of which means further costs and complications. It can also be a time-consuming process, which isn’t ideal when the intention is to secure a bargain property while the opportunity exists.

Bridging loans to purchase overseas homes

This is perhaps why bridging loans have become a popular choice among Brits buying abroad. With so many quality properties being sold for exceptionally low prices, it’s very much a case of first come, first served. Procrastinating for as little as a few days could see the property of your dreams being snapped up by someone else.

Traditional mortgages (at home and abroad) have a tendency to take several weeks to arrange. With a bridging loan, the money needed to pay for a property outright can be accessed in as little as three days. Just as long as the applicant has sufficient collateral to cover the cost of the loan, the application process can be surprisingly simple.

Of course, the key proviso with a bridging loan is ensuring you have a valid exit strategy. That being, a plan for repaying the loan in full a few months down the line Bridging loans are therefore unsuitable for buyers looking to spread the costs of their property purchase over several years, but they can be uniquely cost-effective for those able to repay more promptly.

Independent advice

With such a broad range of options available for financing an international property purchase, it’s important to seek independent advice at the earliest possible stage. Consider the available options, establish your budget, and conduct a whole-of-market search in order to ensure you get the best possible deal from a reputable lender.

Do Bridging Loans Still Have A Bad Reputation?

It’s fair to say that bridging loans landed in the United Kingdom with an initially shaky reputation. For the most part, short-term loans in general have always been viewed with a certain amount of scepticism. Particularly in instances where non-payment leads to heavy penalties in a relatively short period of time.

Today, UK borrowers and financial watchdogs alike are beginning to view bridging loans in an entirely different way. Whichever way you look at it, bridging finance has the potential to provide an invaluable lifeline in a time-critical situation. Nevertheless, this doesn’t mean that bridging loans are always the most appropriate or economical option.

They are one of hundreds of unique financial products available on the UK market, with their fair share of advantages and disadvantages.

Considering all available options

Accessing the most appropriate financial products for any given requirement means considering as many options as possible. The easiest way of doing so is to contact an independent broker, who can compare the market in its entirety on behalf of the borrower.

Should it be decided that a bridging loan is the way to go, it’s important to consider all the advantages and disadvantages ahead of time. A bridging loan could prove invaluable when time is a factor, but it should never be applied for without careful consideration.

The advantages of bridging loans

As far as advocates are concerned, the most appealing advantages of bridging loans are as follows:

  • Bridging loan applications can be completed, processed, and finalised in a matter of hours. Across the board, bridging finance is exponentially quicker and easier to access than a comparable high-street loan.
  • Borrowers have the option of repaying the loan in its entirety in one lump sum on a predetermined date. For some, this is preferable to the usual monthly instalment approach.
  • Lenders often demonstrate a fair amount of flexibility with the collateral they are willing to accept to cover the cost of the loan. This makes bridging finance ideal for property refurbishments and redevelopment projects.
  • Poor credit applicants are not necessarily counted out of the running, as eligibility is usually determined exclusively on the basis of collateral. Even if you have an imperfect credit history, you can still qualify for a bridging loan in no time.
  • Bridging finance can be great for taking advantage of time-limited investment opportunities, such as purchasing properties at auction.

The disadvantages of bridging loans

As for the downsides, the following should be taken into account before applying for a bridging loan:

  • There are typically no allowances for repaying bridging loans over longer periods. Loan terms usually last 6 to 24 months, maximum.
  • Penalties and additional interest charges can be particularly steep in the case of non-repayment of the loan. It’s therefore important to carefully consider your financial status before applying.
  • As bridging loans are secured loans, your property may be at risk of repossession if you fail to meet your repayment obligations as specified in the contract.

In terms of reputation, there will always be those who favour one type of credit over another. Nevertheless, evidence would seem to suggest that more businesses and everyday borrowers than ever before are considering or applying for bridging loans.

At the right time and with the help of a responsible lender, bridging loans can be surprisingly affordable. They can also be the only realistic option on the table in time-critical situations. If you simply cannot sit around for days or weeks on end for a bank to make up its mind, bridging finance could be the answer.