Bridging loans explained: Why they exist, who can get one and how to get one

Bridging Loan

Have you ever considered applying for bridging loans? Maybe you’re considering moving home but need to sell your existing home first and don’t want the hassle of paying rent on two separate properties. Or perhaps you’ve been made redundant and need time to find new employment before your next paycheck arrives in your bank account. Whatever your situation, it may be possible to get hold of a bridging loan.

What are Bridging Loans? 

A bridging loan helps you put your house on the market quickly without getting into debt. Bridging loans contains short term – typically used for six months and sometimes as little as three months. Bridging loans give you a way to move on from a house in flux.

Loans Bridging

Where can I get a Bridging Loan?

If you’re hoping to get a Bridging Loan deal, there are a few different options you might consider. Each of these options has its advantages and disadvantages. But knowing all your options will ensure you get the best deal possible.

An increasing number of companies are turning to the professional bridging loan provider to bridge the gap between the time it takes for them to be paid on a contract and the final invoice is received. The length of these payments can create cash flow issues whilst you wait, sometimes up to 45 days. It, in turn, can cause company insolvency and, in some cases, administration, as there is often a very tight financial window.

Why Bridging Loan Exist? 

Bridging loans exist because the bridging loan market is a niche market within the loans industry. Bridging loans are used by people when they need finance to help them undertake a construction project or buy a new home. They work in specific situations and may be used as a short term loan product or as an alternative short-term funding if you have been refused other types of bank loans.

Who can get a Bridging Loan? 

Bridging loans are for when you need money quickly. The loan amount is typically low because it doesn’t cover long-term expenses like mortgage payments. Bridging loans are available from banks and other lenders and through specialised bridging loan companies. 

Loans

How to get one? 

Typically the borrower will be able to borrow the total estimated value of the property. Although in some cases, this can fall short of the price by up to 10 per cent. Bridging loans aid in purchases in anticipation of completion. They help to fill the gap between borrowing funds from the lender and any savings you might have available for your deposit. Once you’ve borrowed from your mortgage provider, it is also possible to continue making repayments on the bridging loan, saving you from paying out another lump sum.

Calculate your Loan 

Final Words

Bridge loans assist you to bridge the gap between a property sale and the purchase of your next house. You can also be used as a mortgage top-up, but only if you can’t get another bank loan elsewhere.

Apt Mortgages is a full-service mortgage broking business that can help you get a bridging loan. We’re here with you to help you get the most out of your deposit, whether you’re buying your first home, buying your next home, investing or refinancing. Contact us for more details.

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