LEADING UK BROKER FOR

Residential Bridging Loans

Residential bridging loans are ideal if you want to purchase a property but don’t necessarily have the finances to take that step.

LEADING UK
BROKER
FOR BRIDGING
LOANS
SINCE 2004

It’s no secret that taking that first step onto the property ladder is more difficult now than ever. Many people have to save for years to get a deposit together, and the volatility of the housing market means younger individuals seek out rental opportunities as an alternative to buying a property.

Ask most renters, and they’ll tell you that they’d love to have the freedom of owning a property – which is why many investors and homebuyers are seeking out alternatives to traditional mortgaging.

Residential bridging loans are ideal if you want to purchase a property but don’t necessarily have the finances to take that step.

What is a Residential Bridging Loan?

A residential bridging loan essentially fills the gap in a financial deficit. They’re beneficial if you want to purchase a property but lack the immediate cash to do so. This can be for many reasons, including bidding on an auction home, taking on a buy to let mortgage or having a new property in need of extensive repairs.

You can use a residential bridging loan in place of a mortgage, enabling you to speed along the process.

Why Take Out a Residential Bridging Loan?

If you’re wondering why it might be beneficial to take out a bridging loan, there are many incentives, including raising money for a property purchase to fund essential renovations and paying off your debtors. Let’s take a look at each in more detail.

Raising money for a property purchase

 
Whether you’ll buy a property for residential uses or plan to rent it out, you’ll need a certain amount of cash flow to acquire it in the first place. This proves difficult for many people – especially if you’re applying for a mortgage too.

The money can take ages to come through, but a bridging loan is a quick solution if you need urgent funds.

Completing renovations on a property

 
Most people consider taking on a personal loan to refurbish their property, but these loans are often unsecured. They can result in hefty interest fees and hold little benefit.

Bridging loans come with the option to essentially roll up your interest, so when you decide to either sell the property or find a new financing option, you’ll be able to pay the amount back without worrying about excess payments.

Buying a property at auction

 
Visiting an auction means you have to be able to secure a property by outbidding other buyers. Having a bridging loan allows you to have cash at your disposal, making it easier to buy a home.

Waiting for your sale to go through

 
In an ideal world, you’d find a property you like and sell yours immediately after – but as we said previously – the housing market is volatile. Securing a bridge loan means you can make an offer on the property of your dreams and wait a bit longer to sell yours.

Paying off debts

 
It’s pretty rare for people to use bridge loans to pay off their debts, but some do. It depends on your circumstances and amount of debt, so it’s always best to check your eligibility if you’re using the loan to relieve debt.

Who Can Get a Bridging Loan?

 

Anyone can get a bridge loan, and there are no set criteria to define what makes a suitable candidate. Some providers will offer bridging loans to people with bad credit, but your circumstances will be the deciding factor.

Most importantly, the feasibility of your exit strategy is the most significant factor in a lenders decision.

What’s an exit strategy?

 

An exit strategy is how you’ll pay back the monies received. For example, you could buy a property at auction, refurbish it and use the profits from the resale to pay back the bridging loan.

Other exit strategies include moving onto a long-term financing solution and paying back the money through inheritance funds.

How Much Does a Bridge Loan Cost?

Bridge loan repayments depend on how much you borrow in the first place and whether you have a strong exit strategy in place. In most cases, you’ll need to guarantee the money against your house or other assets – which could mean you stack up significant debts on your current home.

The interest rates depend on your agreement with the lender, and you should consider the arrangement fee.

Lenders need security and will be more likely to offer a bridging loan if your current property has development potential or a strong prospective valuation.

It’s also important to mention that your property may be repossessed if you cannot stick to your end of the bargain.

The Types of Bridging Loans

Residential bridging loans each have different criteria that you must meet to be successful in your application. Knowing the difference between the two enables you to find the right loan for your needs.

First Charge Bridging Loan

First charge loans are ideal if you have no fixed finance agreement on your current property. So, in most cases, you’ll only receive this loan if you don’t have debt on your property or are in the early years of a mortgage.

The most common issue is mortgage providers, which might penalize you for refinancing your property so early.

Second Charge Bridging Loan


A second charge loan enables you to acquire bridging finance regardless of whether you have debt on your property. This solution is ideal if you want to avoid the penalties associated with early mortgages.

Are Bridging Loans a Good Idea?

If you’re seeking a short-term loan, bridging loans are an excellent solution. While personal loans are unsecured, a regulated bridging loan can provide you with stability, security and peace of mind.

As a registered England and Wales company providing a first charge loan and second bridging options, we’re confident that you’ll agree our finance options are designed to suit your needs.

How to Secure a Bridging Loan Through Loan X

Suppose you’re looking for a cost-effective short term solution that enables you to fund the purchase of a new property or helps you to become an investor. While there are many bridge loan providers to compare, our services are designed to bridge the gap so that you can take advantage of long-term financial security.

Our company is registered in England and Wales, and we’re also authorised and regulated by the Financial Conduct Authority.

Whether you’re looking for a first charge bridge loan or second charge loan, our friendly team can advise you on our financial services and monthly repayment options.

Contact us at our registered office today.