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How Does A Bridging Loan Work?
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A bridging loan is one that is taken against secure property with value, such as your home or property. It is a short-term advance, usually for less than a year. This type of advance was formed to allow for the time difference between selling a home and purchasing a new one. This is particularly helpful in times when the home market is fluctuating. It may also help when you are moving to a new area and need to find a new home quickly.
Banks and financial institutions as well as specialty lending companies offer these advances. The credit is usually available for up to 85% of the property value. The payments are made directly to the new lender in monthly installments as provided for in the advance contract.
Here are the things to remember about how a bridging loan works:
Quick processing – This advance provides for quick processing because the funds are needed quickly. Provide the items requested and the process will be speedy. Most, if not all, the things needed have already been used in the new mortgage process.
Fast cash – This credit offers fast cash, usually within several days to a week of application. This is necessary to ensure that the closing date of the new property will be met.
Can be used for other things – The bridging loan can be used for other things such as bill repayment or holidays.
Up to 85% of home value – You can request up to 85% of the home value. Keep in mind that the interest rates for these types of advances are higher than interest rates for traditional ones, so it may not be cost effective to request extra funds this way.
No credit check required – How one of these advances works is that they use the information from the new mortgage to process the advance. A credit check was just recently done for the new mortgage so this may not be required.
Must be resident of UK and be over age 18 – These are the only two legal requirements in order to apply for a bridging loan.
Bridging
Loan
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- Terms
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| Who's Suited |
- Purchasing
property at auction.
- Property refurbishment or conversion.
- Chain breaking mortgages.
- Homeowners who have been or about to be repossessed.
- Funds required within days not months.
- Short-term finance for business purposes.
- Commercial property purchase and refinance. |
| Features |
- 100% LTV
Available.
-Market leading rates from 0.75%.
-1st charge or second charge equity release. |
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