Using bridging loans to buy residential property

Thursday, 25 August 2011 12:09

A bridging loan can help you to buy property

A bridging loan can help you to buy property

Bridging loans can be a very effective financial product with which to meet a wide range of goals; however, they are most often used to purchase property, largely due to the fact they can be applied for and taken out at relatively short notice.

Time is always of the essence when buying a home, as any delays in raising money to fund an acquisition could see your dream residence slip through your fingers and be sold to another party.

One instance where you may find that this happens is when there has been a problem in processing the sale of your existing property. It is likely you were counting on the money that would have been raised here to fund the deposit for your new place and help you advance up the housing ladder, but if there is a delay in getting a building survey completed or some other technical glitch, this cash might not be forthcoming immediately.

In times like this, you may be inclined to think that you have missed out on buying the property altogether, but should you apply for a bridging loan this may not be the case.

You'll be informed whether your application has been successful within a couple of hours and – provided that it has been approved – the cash could be in your account in just a few days. As such, you will soon have sufficient resources to go ahead and complete the transaction, while you wait for the problems preventing the sale of your old home to be resolved. Once these have been dealt with, you can use the funds raised to repay your loan.

Not only does the fact that bridging loans can be taken out at fairly short notice make them attractive to property buyers, but they are also useful in that they are generally available to people regardless of credit history. Provided you are not currently bankrupt, you should be able to obtain bridging finance without too much trouble, even if you have had problems keeping on top of your monetary commitments in the past. This makes them a great product with which to tackle a range of fiscal problems.

If you've been searching for that dream home for several months and just need a little extra assistance to make your property buying aspirations a reality, a bridging loan can be a great tool. However, they can also be helpful if you've just bought a property at auction.

Attending these sales can be a great way to get your hands on a bargain, but once you've placed your winning bid you will only have a few weeks to complete the transaction. This is unlikely to be enough time to arrange a traditional mortgage deal, but while you are going through the process of obtaining one, getting a bridging loan can give you the short notice money needed to ensure the acquisition goes ahead and that you do not miss out.

If you are unsure about how you will raise the funds with which to buy a home, you may well have some bridging loan questions. Speak to an expert and you should find that all your options are explained in a clear and concise manner.

Whatever your circumstances, however, you are bound to find bridging loans are an effective tool in helping you to buy property and advance up the housing ladder.



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  • Important questions to ask bridging loan companies

    Before taking out a bridging loan, you must understand a number of key points. These include the rate of interest you will be charged, the length of time you have to repay the loan and whether there are any arrangement fees that apply.

  • Why bridging loans are only suitable for short-term funding

    You should only consider bridging finance if your funding needs are temporary. This is because the high rates of interest make bridging finance unsuitable as a long-term solution, so if you have long-term needs, you should look at other options.

  • Banks vs. specialist lenders – which bridging loans are best?

    Both banks and specialist bridging loan companies can provide the bridging finance you need, meaning you need to compare products from a range of providers. You need to look at factors such as interest rates and arrangement fees.

  • Can bridging loans work for those who only need small amounts?

    Some bridging loan companies will lend up to £5 million if you have sufficient equity in your home, however, what if your borrowing needs are more modest? If you need a sum of £10,000, bridging loans can still be an option.

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