A bridging loan is a short-term loan that can be used to finance a property purchase and speed up the conveyancing process.
With a bridging loan you could:
Depending upon your circumstances, a bridging loan can be a practical alternative to a conventional mortgage.
Bridging loans are normally taken out for between 1 month and a year. The loan is repayable at the end of the term.
There are two kinds of bridging loan:
Unlike conventional mortgage lenders, most bridging loan lenders do not charge a penalty fee for early repayment. So, if you take out a 10-month bridging loan but can pay it off after 3 months you can do so, saving yourself interest payments.
Bridging loans usually have higher interest rates than conventional mortgages, although they are becoming increasingly competitive.
Failure to repay a bridging loan at the end of a term is likely to incur significant costs and can lead to repossession of your property.
A bridging loan lender will take into account several factors when considering your eligibility. If you have a mortgage with the lender already this may be an advantage.
You will usually need to be an existing property owner to be eligible to take out bridging finance. The bridging loan lender is likely to secure the loan against your property. If your property has an existing mortgage, then the bridging loan lender will take out a ‘second charge’ against your property. This means that if you fail to make repayments on your property your mortgage provider takes priority over the bridging loan lender because they have a ‘first charge’ against the property.
You will also need to provide:
Our specialist solicitors understand the requirements of different bridging loan lenders, and we have completed hundreds of successful applications over the years. We know that your property transaction is time sensitive, and we can work closely with your lender’s solicitor to meet your timescale.
We can help you to secure short-term finance by compiling, reviewing and advising you on all the documentation the bridging loan lender requires so that you satisfy their conditions.
A bridging loan is a lot quicker to arrange than a conventional mortgage. As long as your application is filled in correctly and you do not need to clarify any details then your loan could be in place within days. Our solicitors can help the application process to run as swiftly and efficiently as possible.
Sometimes when a person dies sorting out their estate is not straightforward. A bridging loan can be a way of paying off the person’s debts and Inheritance Tax without being forced to sell valuable assets. It can provide breathing space while financial matters are resolved.
Our probate solicitors at Davisons can advise you about your options so you can make the best decisions.
