When you are looking to buy, there can be a number of financial hurdles that can get in the way. Mortgages can take months to organise, and you may find that the chain you are in makes it hard to make an appealing offer to the seller of your dream home. You may also want to buy a cheap property in need of work that you can't get the mortgage for until the work is done, or to raise the money fast to buy a house at auction or for a great fast sell price.
In most of these situations, the best option is to get a residential bridging loan. Here we look at what that means, and why it is a useful option in many property financing scenarios:
What Are Bridging Loans for Property?
A bridging loan is a shorter-term loan that offers a large sum of money for the purposes of buying property. It differs from a mortgage in that it is much faster to organise and is only intended as a short-term loan, which will later be repaid either when the mortgage is arranged, or when you get the funds by selling your existing property, if you are taking out the loan because you are in a chain. The terms of bridging loans are normally between three months and two years.
Who Uses Bridging Loans?
Bridging loans are used for different reasons, and by two main groups of people. The first are owners who also want to live in the property they are financing, and the second are people or businesses investing in property for other reasons, such as property developers, landlords, and people looking to flip houses for fast profit. Bridging loans can be taken out in the UK by individuals, and also by companies. Taking out a bridging loan places a charge on the property, which will be the first charge on a property bought by developers, and the first or second charge on properties bought by owner-occupiers.
What Are the Advantages of Bridging Loans?
The main reasons to take out bridging loans are that they give you options you wouldn't have if you were reliant only on a mortgage or the funds from selling a home you own outright to buy another property. People can miss out on being able to buy their perfect homes, or being able to take advantages of great deals, because they don't have fast access to money that they will have once a mortgage can be agreed or their own house sells. Bridging loans effectively remove that obstacle, and make more buying options available to the person looking to buy a property. You can find out more about UK residential financing through bridging loans by visiting the Alternative Bridging Corporation at: https://alternativebridging.co.uk/residential-loans/.
If you are considering investing in property or moving, then looking into how this kind of home financing can work may open up new possibilities for you as you seek out the right property for you.