Bridging finance is commonly thought of as a way to bridge the gap between selling your current house and buying a new house, however, there are plenty of other uses that are often forgotten. Here is our list of when bridging finance is a good option to consider.
When you’re buying a new home with the proceeds from selling your current home there are associated risks to both sale and purchase. If something goes wrong with the sale of your current property, e.g., the new buyer pulls out, it can leave you unable to buy your new property.
Bridging finance allows you to continue the purchase of your new property while you find a new buyer for your existing property. Once you have a new buyer you’re able to exit your bridging loan with the net proceeds from your sale.
When buying a property, lenders require the property to be in a habitable condition. If not in a habitable condition, the property will be deemed unsuitable security for mortgage purposes.
Bridging finance allows you to access funds to complete the purchase and potentially the renovation works on the property.
Following completion of the necessary works you are able to repay the bridging finance by either selling the property or getting a long term mortgage as the property is now in a suitable condition.
There are lenders who will allow for a rebridge. These are often taking in scenarios where delays in the planning permissions and delays on refurbishment/construction works.
Lenders will also rebridge in the event where the initial bridging lender will not extend their facility.
Regulated/Residential bridging can be used in the event you wish to downsize or purchase a residential property without having sold your current primary residence. This is a very useful tool in being able to secure a property quickly and not be involved in a chain.
Upon a successful bid and the gavel falling you have entered into a legal contract to purchase the property (exchange of contract). This will require a deposit (typically 10%) and auctioneers fees to be paid immediately.
There is a set completion date (often 28 days) to complete the purchase. Bridging finance is most often used to facilitate the purchase due to the nature and speed of underwriting.
Here at Coreco our expert team of brokers have many years of experience finding and successfully applying for bridging finance, no matter the reason. If you’d like to learn more take a look at our bridging finance page or you can speak to one of our brokers directly.
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