New Mortgage Guides

Other Mortgage Guides

Mortgage Types

Mortgage Tools

Mortgage Petitions
Mortgage Dictionary
Maximum Borrowing
Income Insurance
Health Insurance
Useful Sites
Credit Cards
Personal Loans
Life Insurance
Pensions

Bridging loans

Bridging loans mortgage guide

What is a bridging loan?

It's a type of loan which homeowners can take out to solve temporary cash problems.

For example, if you want to move but you need to complete on your purchase before your sale has gone through, you can take a loan to cover you to bridge the gap.

A bridging loan is a loan usually taken out as an immediate source of a large sum of money, often to cover the costs of purchasing a property.

Bridging loans are usually repaid within half a year of being taken out, though it is often less.

Is a bridging loan like a very short mortgage?

Not quite. Because of the extra risks, bridging loans will be more expensive - usually around 1% a month at least.

Only ever take out a bridging loan if you know you won't need the money for long - otherwise the expense will be ridiculously high.

There are specialist bridging loan providers - and just as with ordinary mortgages, they will need to be convinced you're not overstretching yourself.

Are they a good idea?

Bridging loans are the last resort: Don't take one out unless you really can't avoid it. If you are in a property chain which you don't want to break then they can work - but do get legal advice first.

For example, they could work if there are a few days' delay between completion on your purchase and on your sale. However, they must not be used to prop up a chain which has no certainty of being completed.

If you default on a bridging loan, you may be in trouble on both your properties as the bridging loan lender may take both as security.

What sort of bridging loans are there?

You can get a 'closed' or 'open' bridge. A closed bridge is for homebuyers who have already exchanged on the sale of their existing property.

Only a tiny number of sales fall through after exchange, so lenders are happy to offer closed-bridge financing.

An 'open' bridge is for buyers who have found a home to buy but haven't sold their home and are thus more risky. Lenders will usually put a 12 month limit on bridging loans of this type.

What's the alternative?

If you can't sell but are determined to move, why not let your current home instead? Rental payments should be sufficient to cover the mortgage.

Remember you have to tell your lender if you're letting a property - and also that you'll need to insure the home and get decent tenants.

Receive Mortgage Advice from a Regulated Advisor

There is no better time to be seeking suitable mortgage advice from a Regulated mortgage advisor

Submit your details today for an obligation-free chat and a regulated mortgage advisor will call you back to help you find the mortgage that best fits your needs.

We will only provide your details to one regulated advisor.

Your mortgage

Purpose of mortgage: * Help

Purpose of Mortgage

A first time buyer is a buyer who has never purchased a property before and generally has previously lived with relatives or friends or occupied rented property

House purchase is when an applicant, who has been a previous purchaser/occupier, is intending to purchase a different property for owner-occupation

A remortgage occurs when an applicant wishes to switch a mortgage loan from one lender to another without moving properties. The existing loan is repaid by a loan from the new lender. Depending on the amount of equity, this could also be a means of raising additional funds.

A buy to let mortgage is for when a property is bought as an investment and rented out to a tenant who pays a rental income.

A right to buy mortgage is only available to council tenants or certain types of tenants where the landlord has received a subsidy from the Local Authority. The tenant must also fit certain eligibility criteria related to the type of property and the length of time they have lived there. The amount of discount depends on how long the tenant has lived in the property and is also calculated taking into account any improvements carried out at the tenants own expense.

A self build mortgage is taken out on a property that is either still to be built or still under construction. Typically, the lender will only pay out the loan in stages, corresponding to the completion of various stages in the construction. There are generally six stages to a build where your mortgage company will release funds to allow the project to continue. They are:

Stage 1 - purchase of the land or property;

Stage 2 - preliminary costs and foundations or preliminary costs and structural overhaul;

Stage 3 - main structure erected;

Stage 4 - making the property wind and watertight;

Stage 5 - first fix and plastering;

Stage 6 - second fix through to completion

This is a specialised mortgage product designed for people over the age of 55 , which allows them to release the some of the equity they have built up in the home; this could be through owning the property outright, or from the value of the home increasing over time.

The householder retains ownership of the house whilst being able to use the equity to boost their income. There are several products on the market, some of which you only pay the interest back during your lifetime, and others where you pay nothing back during your lifetime and the repayment is taken out of the estate on death. For this reason, it should be noted that the applicant should be aware that they will be asked if they have discussed with their family members the reasons for applying for equity release.

Value of property (£): * Help

Mortgage amount (£): * Help

Do you or your partner have any adverse credit history?

Yes No

Current lender: Help

About you

Title *

Forename *

Surname *

Date of Birth *

Date of birth of joint applicant *

Postcode *

Email *

Contact number *

Alternative number

Questions marked with * are required

Please be aware that the advisor who contacts you will be a third party advisor who has no connection with us. There is no charge to you for using this service. We are paid by charging your assigned advisor a fee for this service. Any advice or assistance given to you by a third party advisor does not represent our advice or assistance and is not checked or endorsed by us. It is your decision whether or not you act on any advice or assistance you are given.

By clicking “Proceed” you confirm that:

You accept our Terms of use and
You would like to be contacted by a regulated third party advisor to discuss your needs.

Your home may be repossessed if you do not keep up repayments on your mortgage.

Financial Services Net Limited and other trusted 3rd parties would like to keep you advised via e-mail or telephone of products, services and other exciting offers we think may interest you. Please untick this box if you do not consent to us contacting you for further information.