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UK Bridging Loans
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Bridging Loans

Found a property but can't sell you own house?

What is a Bridging loan for?

A Bridging Loan is a short-term secured loan and is useful for those who have found a new property but are struggling to sell their existing property. The loan will tide you over until the property is sold. There are two types of Bridging Loans - Open and Closed.


Open Bridging loans

An Open Bridging Loan is when you are buying a property and the sale of your existing property has fallen through or has not yet completed. This type of loan is open-ended.


Closed Bridging loans

A Closed Bridging Loan is only available to a buyer who has exchanged contracts but there is a delay in receipt of the funds to purchase the new property. This is because it is unusual for a sale to fall through at this stage. A closed loan is for a set period.


Other reasons to apply for a Bridging Loan are:


    • To fund the purchase of property bought at auction.
      Buying one property before you have completion on the sale of your existing property.
      Funding the purchase of a property abroad.
      Funding for the purchase of an unmortgagable property until completion of the repairs and availability of mortgage.
      Funding for a property in need of renovation with a view to selling on completion of the improvements. Funding for the repairs may also be available
      If your chain breaks down and you need to wait for others sales to complete

    The loans are always short term usually 3 or 6 months although some lenders offer 12 months. The main providers of bridging loans are specialist lenders and high street banks. However not all banks offer bridging loans. Our advisors at Mortgage Fox can search out the best loan for you. 



    Arrangement fees

    Most lenders will charge an arrangement fee. Some charge a higher rate of interest with a lower arrangement fee. Whilst others will charge a lower interest rate and a higher arrangement fee.


    Typically arrangement fees for closed bridging would be 0.5% of the loan and 1% for an open loan. Anyone requiring an open bridging loan of £100.000 would typically pay an arrangement fee of £1,000. Closed bridging would typically cost £500.00


    If you estimate that you will need the loan for a very short period you should opt for a lower arrangement fee. If you are unsure how long it will take for the sale of your existing property to go through and think it may take several months go for the lower interest payments. Overall this will be the cheapest option.


    You will be required to give security on the loan and prove that you can meet the payments. A valuation will be undertaken by the Lender. The cost of the valuation will be met by you. The will also need evidence that your property is being actively marketed.


    Are there any alternatives?

    If you are unsure about bridging loans you could consider letting your property instead. The rent must cover your mortgage payments. You will need to re-mortgage your old property and have sufficient equity to be able to release it to pay a deposit on your new home.


    It is crucial that you check the renting market in your area first. You need to move quickly. It will however take longer to obtain a buy-to-let loan and advertise for tenants than it would to organise the bridging loan.


    If you don’t need the equity from your old property to fund the deposit on your new home you may find it possible to have two mortgages running together. This will be very expensive but less than the cost of the bridging loan.


    Pro's and Con's of Bridging Loans


    • They can be arranged very quickly and will tide you over at a very stressful time.
      They solve a temporary cash shortfall.
      They are very expensive.

    Your mortgage advisor may be able to arrange a bridging loan for you. If you need help or advice then please contact us and we can help you find the right loan.





    Value of Property  
    (eg 135000) 
    Value of Mortgage
    (eg 85000) 
    Type of Mortgage

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