Bridging loans

Buying a house has been classed as one of the most stressful events you can go through and is likely to be the biggest purchase you make in your life. It’s easy to see how a difficult move can get even harder. Some buyers have described how they felt trapped as they had found a perfect job, had their offer accepted on an ideal property and then they were unable to sell their old house. At times like this it’s worth talking to your mortgage broker to see if a bridging loan could be an option for you.

When discussing your bridging loan options with your mortgage broker you will probably learn about the two types of loans available.  An ‘open’ bridge would be used by a buyer who wants to move and has decided on the property they are going to buy but  hasn’t been able to sell their own property. With an ‘open’ bridge the bank will usually demand a that you have a high rate of equity in your property.  A ‘closed’ bridge usually brings with it less risk and is used after you’ve exchanged contracts. It is extremely rare for a sale to fall through after your solicitors have exchanged and as a result you may be surprised at how many lenders that are able to offer you a bridging loan in these circumstances. 

This kind of finance can be expensive but if you’ve already paid out money on surveys and are forced into having a long commute or simply have a strong desire to move, then the long term gains will mean that a bridging loan could be the best option for you.

Renting your property

For people who are not happy with the idea of a bridging loans it might be worth discussing your concerns with a qualified buy to let mortgage broker. Often it can be possible to convert your mortgage so you can rent your property out. Provided that the lender is happy for you to do this and you have all the adequate insurance you could use the rental income to service the loans you have. It is easy to find out if your area is right for setting up a rental property. Have a word with some local estate agents and do some research on the average rental price for properties similar to your own. In most cases, you will make some profit on the monthy rent after all your running costs are met. Many landlords begin their property portfolios in this way and find it a great way to supplement their income.

Please contact us for more information about bridging loans.