Bridging the gap - bridging loans explained

If you're one of the millions of homeowners that likes nothing more than searching through property portals, then you may have come across a home you just have to have! How do you go about purchasing that dream property when you haven't begun the process of selling your home? A bridging loan could help.

The words asset-based lending - or bridging loan as it's more commonly known - might not be the most exciting words in the English dictionary, but it's worthwhile getting to grips with what it means, how it works and how such a loan could help you realise your dream - before you've sold your current home. The risky lending of the last couple of decades made sure that bridging loans received a bad press, including issues around higher interest rates and sky high arrangement fees, but we've come a long way since then.

Bridging loans are now enabling homeowners to secure their new property before they’ve, in some cases, put their own home on the market.

Bridging loans have become more popular as people’s lifestyle changes, for example older couples looking to move to accommodate elderly relatives or downsize, or people hoping to move to a home with additional accommodation.

Favourable niche lenders
Changes in the way we live, and move, have meant that niche lenders - those that provide asset-based lending or bridging loans - have had to develop innovative ways to lend money in order to compete with the bigger banks, and to make sure that their products are attractive to home owners. It's now common to see bridging loans with favourable terms, fees and deals developing, giving those with specific financial requirements more choice when it comes to borrowing.

The good news for consumers is that the niche lenders have a reputation to uphold, so asset-based lending finance options are robustly regulated.

Most bridging loan providers will lend purchasers up to 75% of the repayment vehicle. In some cases they may be able to borrow 100% of the property value, particularly if people are looking to downsize.
Taking out any additional borrowing on your home comes with risks, so you should speak with an experienced mortgage broker, who will source the best deal for you.

Private Finance
We work closely with Private Finance, who have been successfully negotiated billions of pounds of mortgages since 1999. They are independent mortgage brokers who work on clients' behalf to procure competitive terms and a suitable solution, quickly and efficiently. Many of our clients benefit from their trusted financial service, and they are experts in finding finance for those that require a bespoke solution.

Contact your local branch to find out more