Bridging Loans Purchasing a Home
Increasingly, homeowners looking to relocate are setting their sights on specialist lenders away from the High Street. Discouraged by extensive application processing times and complex qualification criteria, alternatives to conventional mortgages are being sought by more movers than ever before.
Bridging finance in particular has become a popular choice for those looking to streamline and simplify the property purchase process. But what is it about bridging loans for home purchases that holds such appeal?
Is bridging finance a safe option for purchasing a property, or are traditional mortgages better?
What is a Bridging Loan?
Bridging finance is a strictly short-term facility, which unlike a conventional mortgage can be organised within a matter of days. A specialist type of secured loan, bridging finance is issued against qualifying assets (usually a home or business property) in the normal way.
Along with providing fast access to significant sums of money, anything from £10,000 to £10 million, bridging finance is designed to be repaid a few months after being issued. With monthly interest rates as low as 0.5% or less, a bridging loan can be significantly more affordable than a long-term mortgage.
How Does a Bridging Loan Work for a House Purchase?
From the perspective of a homeowner looking to relocate, a bridging loan can be an extremely useful facility when time is a factor.
Homeowners have had to wait for completion of the sale of their current property before being able to purchase their new home. Should the sale of their home be delayed by several weeks or months, their new dream home could slip through their fingers.
With bridging finance, the funds needed to purchase the new home can be arranged and accessed in a matter of days. The new home can be purchased, and the loan can be repaid several months later when their previous property is sold.
Repaid with minimal monthly interest and low overall borrowing costs, the transaction is completed at a significantly lower cost than taking out a traditional mortgage.
What is the Benefit of Using Bridging Loans for Home Purchase?
When you use bridging finance to purchase a property, you effectively become a cash buyer. This means that not only is the purchase process accelerated, but you also make considerable savings on the usual long-term interest payments.
Where difficulties are encountered selling a home or a buyer pulls out of the deal at the worst possible time, bridging finance can offer the ultimate lifeline.
Is it Safe to Use Bridging Loans for House Purchase?
Bridging finance is a highly competitive form of short-term finance, which is also considered safe for eligible applicants.
It is important to remember how bridging loans are issued exclusively on the basis that they are repaid within a short period of time. Monthly interest rates of 0.5% or lower can make for a uniquely cost-effective facility. However, this only applies when the loan is repaid in full and on time, as agreed at the time the contract is signed.
Independent broker support should be enlisted at the earliest stage, in order to ensure all potential benefits and drawbacks have been taken into account. Whether you are planning ahead or in need of assistance with an urgent loan application, we are standing by to take your call.
Contact the team at Bridgingloans.co.uk to learn more, or send us an email with details of your requirements and we will get back to you as soon as possible.