Funding property purchases would be one of the more common uses of bridging finance. By having bridging finance in place, it will help you to stake that claim for your house purchase by maintaining your place in that sale chain. It will help you be successful in purchasing a property at auction. If DIY home renovations are your thing, then the idea of buying a rundown property with a view to renovating it and eventually selling it can be done with the right finance in place. Perhaps you are looking for a holiday home to spend your weekends.
Different Bridging Loan Situations
There are many forms that property purchases can take, and that means finding the right broker to help you with a bridging loan that suits your requirements.
There is a bridging loan that has fixed repayments and a set finishing date. These are popular with buyers who have exchanged contracts on their existing property but the finalisation of the deal, funds wise, will not be completed for a few days or a few weeks.
Another type of bridging loan, on the other hand, is one where no repayment date is set because the sale contracts have yet to be exchanged on the properties concerned. This usually happens when you have found the property you like, your dream home maybe, but you can’t finalise the purchase and move in until you have sold the house in which you currently live. You should be exploring all the finance options open to you in these situations so that you get the best solution.
What About a Second Mortgage?
You can always take out a second mortgage as an option. This might be difficult if the lender determines that you do not have the financial means to be able to afford the two mortgage repayments on a monthly basis. While it is an option you can explore, there will be other criteria you will need to satisfy if you take this route. By all means though, it’s worth checking out.
Higher Interest Rate
If that second mortgage option doesn’t work out then bridging finance is something you may want to consider. One thing to remember with regard to bridging finance is that the interest rates are somewhat higher than a normal home loan rate. That may mean that you consider a bridging loan as a short-term funding option.
For obvious reasons, the interest rate and repayment amounts are important considerations. The longer it takes you to sell your property, the longer it will take for you to repay the loan and that means you will be having to repay more.
The housing market is currently a little hard to determine and can, at times, be described as unstable or turbulent, so there is no way of knowing how long it will take to sell your property. Like all property a lot depends on the following considerations:-
- Proximity to good schools
- Transport links
- Other factors
However, even if your property ticks all of those boxes and is considered a great buy, restricted access to mortgage finance and some uncertainty surrounding the economy could upset or stall your chances of making a quick sale.
At GCC Home Loans, with our 250 lenders from which to choose, we would find one that will take into consideration the likelihood of you successfully selling your property in the near future.
While you may have your heart set on a particular property, ask yourself the questions –
Is it feasible?
Do you have a realistic chance of selling your home in the next few months?
Contact GCC Home Loans to discuss the issue. With their experience in what is becoming a very popular loan style, they can find you a lender that will suit your particular circumstances. It’s a sensible approach to take.