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Bridging loans are becoming more of a mainstream product as both brokers and borrowers
realise the many potential scenarios in which a bridging loan is the ideal product
to meet clients’ need.
Why or when would a bridging loan be the right solution?
Bridging loans have their use whether for home movers, buy to let investors, property
traders or developers, business men or individuals who just need to raise money
quickly.
- Traditional bridging allows for the purchase of a new property prior to the sale
of the existing property. We would take a 1st charge on the new property and a 2nd
charge on the old property, in certain cases allowing the full purchase price to
be released. Loan redeemed via sale of old property and remortgage on new property.
- When client needs to act quickly for whatever reason.
- Last minute hitches: offer of mortgage is revoked or the
buyer of
property drops out and risk of losing deposit
- substantial discount has been negotiated for a quick completion
- Purchase of a property at auction with often only 14 days to complete.
- Mortgage lender retentions: The mortgage lender issues a mortgage offer but imposes
a partial or full retention until certain works have been carried out, generally
ones which have shown up during the survey. Complete the purchase with a bridging
loan, carry out the necessary works and remortgage.
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