How many times have you been casually going about your
business, seen a great property and thought, “that would be
a really nice place to live”? Then you snap out of it,
knowing you can’t lay your hands on the money fast enough.
Well what if you really wanted this property? You discussed
it with the agent, your emotions got the better of you and
you made an offer.
This has to be a fast sale or the vendor will sell it to
someone else, what will you do? How will you find the cash
at such short notice? Unless you happen to have thousands of
pounds lying around in some bank account you forgot about,
you’re going to have to borrow some money and fast!
Did you expect the financial industry NOT to have a product
for people just like you? Of course not. They’ve thought of
everything. The answer is a bridging loan!
A bridging loan provides a temporary window. As is suggested
by the name, it bridges the gap between the amount of cash
you need now and the amount you currently have. What you
earn normally has no bearing on the matter. How much your
current property makes on open market again does not come
into it. Your bridging loan takes care of your what you need
right now.
If you apply for a bridging loan you can buy the property
immediately. You will pay it back when you sell your current
property. So, you see, you can have the best of both worlds.
Just make sure you read the small print. Make sure you’re
not being charged extortionate amounts of interest. I always
make a point of reading the small print, no matter how long
it takes.
Usually, a bridging loan will be a short-term loan with a
repayment cycle of one week to six months. There should
always be a clause allowing the customer to repay the full
amount as soon as their current property is sold.
More often than not, a bridging loan uses the customers
current property as security. As the customer, you have
options. You will generally have the option of securing the
loan on both properties or either one of them. This gives
you a little flexibility.
These guys usually move fast. The brokers’ valuer will
assess the property and come up with a figure on which your
bridging loan will be based. This figure will depend on many
factors. At the top of the list, you’ll find the usual
suspects: location, number of bedrooms, size and the general
condition of the place, to name but a few.
As soon as the valuation is complete, the lender is in a
position to advance the cash to the customer. If you choose
a good broker this will happen fast. As a rough rule of
thumb, expect to be able to borrow up to 65% of the value of
the property. Lenders offer as much as