How to ditch the property chain without ditching your next home

Friday, 31st March, 2017
bridging finance

How many times have you – or people you know – been affected by the dreaded breakdown in a property chain?

Unpleasant, right? Particularly if you’re weeks (if not months) down the line and have all but physically moved in to what you hoped would be your next new home.

The good news is that personal bridging loans provide a way in which to beat the housing chain and reduce your exposure to any last minute nasty surprises.

At the current time it’s not a method that is commonly used as a way in which to ‘bridge the gap’ – and not for any particular reason other than most people don’t really know about it. Or, if they do, they tend to feel that it’s out of their reach. Well it isn’t, and here’s why.

What is bridging finance?

Chain breaking bridging finance solutions represents a fantastic route to keeping on track when it comes to buying your next property.

A bridging loan is essentially a short-term finance arrangement that enables people to complete the purchase of their property even if they’ve been let down by their buyer.

As you might expect, the rate of interest is typically higher – but if you’ve already invested time and money in a process that’s got you right to the finish line, you might be reluctant to throw the towel in.

Can I get a bridging loan?

Landlords and amateur property developers, including those who purchase at auction and need quick access to finance after grabbing a bargain, generally use a short-term bridging loan. However, it has become more popular amongst the general public given the tightening of regulation around lending, and the longer waits for lenders to approve a mortgage application following the introduction of more stringent frameworks around mortgage lending.

Is there an age limit for bridging loans?

People are now living longer than ever before, and with that comes the understanding that people over 75 may also need access to bridging finance, too. However, restrictions on lending has also meant that mainstream mortgage products are more difficult for the elderly to secure, which is why bridging is a useful route to finance.

Interestingly, the rules that restrict the lending of traditional mortgages to those of a certain age do not apply for bridging loans, as interest payments are deferred until the loan is redeemed when the sale finally takes place.

Other than that, anybody is able to apply for bridging finance.

Do your research – and use a broker

As with most mortgages and finance products, much depends on the individual applicant. If you’re considering applying for a bridging loan or are wondering if bridging finance is the right option for you, simply give us a call.

If you have decided on using a broker, then one important piece of advice I’d like to offer is to always use one that is Financial Conduct Authority-regulated – like Complete Mortgages – as bridging loans are a niche product and may not be suitable for everyone.

Interested in something other than bridging finance? We also specialise in buy to let mortgages, first time buyer mortgages, sub prime mortgages, equity release mortgages and self build mortgages. Call us on 01483 238280 or email info@complete-mortgages.co.uk to find out more.

Commercial and bridging loans are processed through our subsidiary company, Complete Mortgages Property Limited.

By Mark Finnegan, Director at Complete Mortgages


Bridge over less troubled water

Tuesday, 15th March, 2016
Short term finance

Bridging loans have reached an all-time high, accounting for £4bn (or 2 per cent) of the total mortgage lending market. A huge achievement given how prior to the financial crisis the sector was worth less than £1bn.

The meteoric rise of the bridging loan began when, during the troubled times that followed the crisis, lenders stopped lending and the economy stopped growing, forcing those in need of finance to ‘bridge the gap’ on any finance-related agreement they either had or were in the process of arranging.

Nine years later, however, and during a period when economic growth is steady and mortgage deals are amongst the most competitive we’ve seen in years, we’re still witnessing a 300 per cent increase in the value of bridging loans being granted. So, what’s behind this ascent and can we expect to see this upward trend continue?

In short, the answer is ‘yes’ and it is mainly attributable to the exponential rise in property prices and lenders’ increasing willingness to lend on projects that, not too long ago, they wouldn’t have even considered. Let’s not forget that the average property price in 1975 was £10,388 compared with £195,279 in 2015* – a huge gap and one that traditional mortgages alone have, arguably, struggled to fill.

The flexibility of a bridging loan, the fact that it’s granted on the basis of the borrower’s security in addition to its clearly defined loan term, also has wide appeal (for both borrowers and lenders), too. Its short-term nature, where a borrower agrees to pay back the entirety of the loan plus a pre-agreed amount of interest by an arranged date is, for many, a stronger proposition than a conventional loan, where on-going repayments are made on loans often spanning decades. A bridging loan can also be granted within seven to 10 days. And it’s these factors that are seeing bridging loans increasingly being used for a variety of purposes and not just property purchases.

As a Guildford mortgage broker that specialises in bridging loans, having recently secured the coveted consumer credit licence, we’re seeing the perception of a bridging loan shift from last-minute property measure to a serious alternative to mainstream lending. In fact, our clients have used bridging loans for buying property at auctions through to financing business operations and even paying that untimely (and surprise) tax bill.

However it is not always straightforward and as an experienced mortgage broker, it is Complete Mortgages’ job to help you establish a) if bridging finance is available to you and b) if a bridging loan is the right solution for you. After all, and in the interests of transparency, short term and quick access finance often comes at a price and if there’s a better, more suitable option for a borrower, then it’s our responsibility to find and present it to the client.

In summary, bridging loans are now a much more common route to finance however the pros and cons need to be explored before you sign an agreement. For those considering arranging a bridging loan or if you simply want to explore your short-term finance options, then get in touch with someone at Complete Mortgages on 01483 238280 or email info@complete-mortgages.co.uk.

And remember that we don’t just specialise in bridging loans, but also buy-to-let mortgages, commercial mortgages and insurance, too. Call us to find out how we can help you in 2016.

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

*Source: www.economicshelp.org

By Mark Finnegan of bridging loan specialist Complete Mortgages


Dragonfly launch bridge-to-let – lowest rate ever

Wednesday, 7th November, 2012

Dragonfly Property Finance has today launched the UK’s first ‘bridge-to-let’ product – a hybrid of a short and medium term loan that boasts the lowest bridging loan rate ever offered in the UK at 70% LTV.

Dragonfly’s bridge-to-let product is a 2 or 3 year fixed rate product with an initial 7 month bridge period built-in.

Interest during both the initial bridge period and the remaining term of the 2 or 3 year loan is charged at 0.749% pm (8.99% pa).

If borrowers select the deferred interest option, this lowers the pay rate further to just 0.583% pm (6.99% pa).

Bridge-to-let enables borrowers to redeem the loan free of penalties within the 7 month bridge period.

If they are not able to redeem the loan within that period, borrowers have the safety net of seamlessly switching into Dragonfly’s two or three year medium-term loan.

This happens automatically, without the need for any further underwriting or additional documentation.

The minimum loan size for the bridge-to-let product is £1m and the maximum loan size is £25m. An initial tranche of £50m has been put aside for the launch. Dragonfly’s bridge-to-let product is especially suitable for borrowers who need to do minor works to their property in the bridging period and want the assurance of a guaranteed Buy-to-let loan to take out the bridge.

Jonathan Samuels, CEO, Dragonfly Property Finance, said: “Bridge-to-Let gives borrowers the best of both worlds: the lowest ever interest rate on a bridging loan and a powerful built-in protection mechanism.

“With the typical bridging loan rate roughly 1.15% pm, the bridge we have built into the front end of this product — at 0.749% pm — is truly exceptional.

“And if borrowers can’t redeem within seven months, they are simply switched onto our medium-term product without needing to be underwritten for a second time.

“This product is both a hedge and a hugely powerful acquisition tool for professional property investors.”

Dragonfly is on Complete Mortgages’ extensive bridging lender panel and we also have whole of market access for buy to let mortgages.  Please contact one of our bridging loan or buy to let experts at out Guildford office on 01483 233014.  We also have a member of our commercial / bridging loan sales team based in London.