Bridging loans are short term solutions until a more permanent or next stage of financing can be arranged or comes to fruition. This is then used to repay the bridge (often known as the exit route).
Before securing a bridge loan you need to carefully consider your plans and be sure there is a suitable and plausible exit route available. This type of borrowing is generally only arranged over a 3, 6, 9 or 12 month period, so it’s extremely important to look past the initial bridge itself.
We would always consider the route of borrowing through a standard mortgage and look at options for mortgages, remortgages and further advances before considering a bridge loan for a client as a bridge loan carries more risk than more standard borrowing options.
Exit strategies for a bridge loan could include sale of the security property, refinance to a normal mortgage product, sale of another asset or funds from many other sources as overall the bridge provider’s main focus is that the exit is a feasible one.
Bridging loan interest rates are typically monthly rates (as opposed to annually calculated rate on long term finance such as a mortgage or loan) and vary depending various factors. However, it is fair to say that when compared to most mortgage rates a bridge rate is much higher.
Maybe you have a great opportunity to buy a property to refurnish but can’t arrange a mortgage due it’s conditions or have a property you need to purchase before your deposit is released from your own property sale … Give us a call and let’s see if a bridge loan can help ‘bridge’ your short term needs.
'Open' or 'closed' bridge loans
A Closed Bridge Loan is commonly used when a buyer has found a property already and exchanged on the sale of their existing property. However, an Open Bridge Loan is commonly taken out by a buyer who has found their ideal property but may not have put their existing home on the market yet / have any offers on their property yet. This can often be considered higher risk and have a higher rate of interest in place.
Here at Roberts McBain Mortgage & Finance Ltd we have the advantage of being regulated by the Financial Conduct Authority and can arrange Regulated and non-regulated bridge finance.
This is a specialised area of lending and we have routes to some of the most credible, well established and competitive bridge providers in the UK.
Remember - A bridge loan is likely to be more expensive for every pound borrowed, compared to loans that are taken out over longer terms so making sure this is the right option and that there is an obtainable, feasible exit (way of repaying the loan) can be put into place is essential.
A mortgage is a loan secured against your home or property. Your home or property may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.
The financial conduct authority does not regulate most forms of bridging finance.
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