You have found your dream home in London, and you want to move forward with the purchase. Like many, you decide to sell your old property to buy the new one. Unfortunately, selling your previous property can take time.
What should you do?
Well, you don’t need to worry. While short term bridging loans are available in London, you can always get the right amount of money to buy your new home.
Short Term Bridging Loans Explained
A short-term bridging loan is a type of loan that can be provided to meet the needs of customers until they can obtain long term finance of their own (mortgage). It is used to help cover financial difficulties between the process of buying new real estate and selling the existing property, often known as “bridging the gap.” Bridging loans are also known as “temporary financing” or “swing loans”.
Explaining Secured Property For Bridging Loans
A bridging loan is a guaranteed loan. This is because the customer must place property as collateral. This property may be in the form of a borrower’s asset.
Your collateral house does not have to be in London, but it does have to be in the UK.
The borrower will be asked to guarantee a loan with some form of security. Heavy equipment, trade equipment, inventory or other commercial or residential real estate owned by the borrower, and even property involved in the purchase process, can be used as collateral for the loan.
You can access short-term bridging loans with the right security. However, the actual amount of money mainly depends on the value of your property.
A bridging loan is indeed safe, but you must not forget that the loan comes with a higher interest rate due to it being a short-term loan.
Important: Your property is at risk if you don’t keep up with the repayments.
However, before applying for this loan, if you conduct thorough research, you will easily find lenders who offer the right amount of money at a reasonable interest rate for you.
Where Do I Acquire Bridging Loans In London
Now you know how to access short term bridging loans from various financial institutions, banks and specialised bridging lenders in London, where is the best place for this? There is another option you can take to apply for this loan instead of just the traditional bank.
Applying online is much faster and more reliable than any other conventional way. Using this method, you can easily choose the lender of your choice who will offer you an attractive loan rate with favourable loan conditions.
Online search is convenient; you can request it from a computer that has internet access from anywhere in the world.
The borrower can google various online loan websites that offer bridging loans, by simply searching “bridging loans London” or “residential bridging loans London”.
Online lenders will quickly check the information you provide on the form and contact specialised brokers who can offer the best loan offer for you. You only need to fill out a short form to apply for a loan.
A broker collects loan quotes from various lenders and compares them to find the most suitable loan for your situation.
A strong relationship with a broker can be helpful when applying for a short term bridging loan. They can explain what is required to get the best value out of a bridging loan in London. Try to find a broker in London with “whole market access”.
Get a No Obligation Bridging Loan Quote Today or Call 020 3393 9277
Explaining Some Uses Of Short-Term Bridging Loans
The borrower can be an individual or a corporation and the terms of the loan depends on each individual situation.
The purpose of the loan may be:
- To immediately purchase a house, pending a long-term mortgage agreement.
- Commercial real estate transactions.
- Purchase of land
- Property purchase at an auction
Open and Closed Bridging Loans
There are two types of loan to understand; open and closed bridging loans.
An open bridging loan is provided to a borrower who implements a plan to purchase a new home without agreeing on the terms of sale for an existing home, for example with no clear exit strategy.
Closed bridging loans, on the other hand, are provided to borrowers who have agreed to the conditions and have a clear exit strategy in place.
Want to know more about obtaining a bridging loan for property development?
What Terms Can I Expect
Bridging lenders typically permit 65% loan to value (LTV) of the secured property.
It is possible to find a higher loan to value borrowing but bear in mind this will entail higher interest rates in the long run.
A standard bridging loan will range from £25,000 to £5,000,000. Some lenders may also provide bridging loans for a more significant amount if necessary.
The repayment terms for a bridging loan usually ranges from 2 weeks to a maximum of 12 months. Bridging finance interest rates vary typically from 0.4 to 2% monthly.
Interest rates can be applied to repay in three ways.
- At the beginning of the loan term, known as (retained)
- On a monthly by month basis
- At the end of the loan term (Rolled or deferred)
Ultimately the term of the loan will depend on the lender, the security and the borrower’s situation.
Excellent credit history is always beneficial to you. This will help you get the best rates and terms for your individual situation.
Today, most London bridging loan lenders offer short term loans to freelancers or people with a bad credit history who in the past had difficulty obtaining loans and mortgages, so long as you have collateral.
When buying a home in London always consider doing so with a short term bridging loan.
Property is required as security and you should always have a clear plan and exit strategy. Find a broker with “whole market” access to get the best possible rates and terms without hidden charges, who will guide you in the right direction.
Property Finance Partners has over 100 years of combined experience in property finance. Find out what we can do for you call 020 3393 9277 or Email: [email protected]