A bridging loan is a financial solution that helps you buy a new house before selling your current one. It provides quick access to funds, allowing you to open up to opportunities in the housing market without waiting for your old property to sell. Bridging loans can be used to purchase a new home, release equity in your current property, fund renovation projects, and downsize.
While they offer flexibility, it’s important to be aware of their higher interest rates and fees. Speak with a bridging specialist today to run through your options and answer all your questions.
Speak to an Bridging Specialist - It's Free!Before you start your search for a bridging loan to buy a house, it’s essential to have a clear understanding of several factors:
By considering these factors in detail, you’ll be better equipped to find the right bridging loan to buy a property, tailored to your specific financial situation and requirements.
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A Bridging loan is an quick way to borrow money in the short term. They can be used to ‘bridge the gap’ if you need to buy one property before selling another. Compared to a typical mortgage, bridging loans can be arranged quickly if speed is important.
However, bridging loans are a secured loan, meaning that you have to secure an asset against them (usually a property or properties). As there is a risk of losing your asset.
Ranging from simple to complex scenarios, some examples of bridging finance solutions.
When considering how much you can borrow with a bridging loan, it’s essential to understand that the maximum loan amount is typically determined by the loan-to-value (LTV) ratio. In most cases, lenders cap the maximum loan, including any retained or rolled-up interest, at around 75% of the property’s value.
This means that you can borrow up to 75% of the value of the property being used as security for the loan. It’s worth noting that this limit applies to the total value of the property or properties offered as security, even if you’re using multiple properties to secure the loan.
Therefore, your borrowing capacity with a bridging loan will depend on factors such as the value of the property, your financial situation, and the lender’s specific criteria and risk assessment processes.
Generally, you’ll need a deposit for a bridging loan. The deposit requirement varies but typically ranges from 20% to 40% of the property’s value. Having a deposit reduces the lender’s risk and may improve your loan terms.
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