Bridging Loan For House Purchase – How To Get A Bridging Loan?
If you have found a house you want to buy and plan to move quickly, a bridging loan for a house purchase is a great option. It is short-term finance and is used by many borrowers to help them make an important purchase. It is used by developers and landlords when they need to complete transactions quickly and purchase residential property under specific circumstances.
If you consider a bridging loan for a house purchase, you are on the right path.
What is a Bridging Loan?
It is a short-term and most supple form of loan, typically lasting up to 12 months, which is made with a plan to fill the gap between money going out and coming in. Bridging loan is used when you pay for something new while waiting for the amount to become available from the sale of other resources. In the real estate business, developers who buy property or land are often used.
After having a brief understanding of bridging loans in the UK, let’s move forward to how it works.
How does it Work?
You can borrow between 50,000 to 10 million pounds with a short-term bridging loan. The amount solely depends upon how much equity you have available. The maximum loan included with interest is limited to 75% loan-to-value. Other than this;
- You can immediately borrow the money to keep your property operation on track.
- You can borrow a large amount of money and,
- Repayment terms are flexible.
Can I Use a Bridging Loan for a House Purchase?
Yes, you can. It is a convenient alternative to a mortgage in a few situations. This is often feasible when transactions need to be done quickly, and a mortgage would take a long time to arrange. Bridging loan applications can be processed in a week or faster, which can be a bounteous deal if you buy a house at auction or surpass a rival developer.
A bridging loan works best when you need fast funds to pay for the property you are buying and waiting for the sale of the existing house or when the borrower doesn’t qualify for a mortgage. As the interest rate over it is higher than mortgages, most borrowers remortgage their property to pay the loans and settle the debt over the period.
Why Bridging Loans Differ From Other Types of Finances?
When planning to take property finance, most people will opt for traditional ways such as high street banks or others to arrange a mortgage. On the other hand, bridging loans have many features that make them a developer or landlords’ favorite:
It is a short-term loan, whereas mortgages are designed for long-term, usually with a range between twenty to thirty-five years.
It can be arranged quickly to fulfill your deal needs. Work with professional brokers who can help you with the process.
Bridging loans come up with roll-up options, which means interest rate payments can be delayed.
Flexible lending options.
Speak to our expert bridging finance broker as sometimes it can be not very easy, and the stakes are often high. Professional advice can help you, and is worth its weight in gold.