Bridging Loans

A Bridging Loan is a short term loan (usually at a higher rate) taken out to cover the financial gap between buying a new property and selling an existing property. Bridging Loans may be used to purchase residential or commercial properties. Some lenders offer bridging loans to people who have a poor credit rating or are self employed. You will be expected to make the repayments on time just like any other type of loan. The interest on the bridging loan can be higher than on other loans. You must have a valuation survey done in order to get a bridging loan.
A bridging loan can help you if - you are buying a home and the vender is ready to finalize the sale but the buyer of your house is not ready to finalize yet. You may need the proceeds from the sale of your property to help complete your purchase this is when a bridging loan is very helpfull in sorting out this situation.

Two types of Bridging Loans

• Open Bridging Loan: If final terms and conditions have not been reached this loan comes into action. You still want to purchase a property that you want, however you do not have the terms set by which you are going to sell your house yet.
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  Closed Bridging Loans: You can use this loan if the terms and conditions of the sale and purchase of both properties have been finalized but you find there is a delay on moving in for some reason.

In the case of buying property, a Bridging Loan is normally secured by getting a mortgage on the new property, and taking out a second mortgage on the property that you are selling. In this case the loan will depend on a positive value of the relevant properties.

Lenders will usually allow Bridging Loans of up to 65%f the value of the properties - less any existing mortgage. But this will depend on the lender so you should shop around for deals. You can usually borrow between £25,000 to £500,000 as standard. Larger loans are possible but may take slightly longer to arrange.

Depending on the size of the loan you may have to pay a management fee which could be 1.5% of the lending each month. Six months is the normal term of a bridging loan. Bridging loans are like a mortgage and security is your home. Any land in England, Scotland or Wales whether it be commercial or residential can be used as security for a bridging loan. Bridging loans can be used for other reasons besides property, ie:-weddings, holidays, business capital finance etc, - cash that can be used for anything.

At PeopleFinance.co.uk we can help you find a Bridging Loan because an independent financial processor will aim to get you the best deal to match your own personal credit circumstances.

Enquire Online for a FREE Quote - UK Online Bridging LOAN ENQUIRY FORM

Related glossary terms to Bridging Loans:
Adverse Credit | Credit Checks | Debt Consolidation | Unsecured Loans | Secured Loans | Personal Loans | Homeowner | CCJ's | Defaults | Arrears | Bad Credit