If you are planning to sell your old home and buy a new one, which should you do first? If you decide to sell your current home first, then you’ll be under pressure to find a new home quickly, and you may have to settle for a less desirable home. You may also be required to move into temporary accommodation.
On the other hand, if you decide to buy a new home first, you’ll end up scrambling to sell your current home, especially if you want to sell your home for the best price in order to make a down payment on your new home.
However, you can get a bridging loan from a bridging lender for the period between when you close for your new home and when you get funds after selling your old home, to bridge the gap. You can use your old home to get bridging finance on your existing home and use the finances towards a down payment and closing costs on your new home. You’ll be able to repay the bridging loan once you sell your old home.
A bridging loan mortgage takes away the hassle of owning two homes at the same time. It means you avoid falling into the trap of paying two mortgages, and many lenders are very reluctant to offer a second mortgage to someone who is still selling their old home.
Also referred to as gap financing, bridging finance, short term finance, swing loan, a bridging mortgage, or interim financing, a bridging loan is a temporary loan, which allows you to dip into your current home’s equity to help you fund your new home’s down payment. Your existing home serves as the collateral, and you can buy a new home without waiting to sell your current home. There are many types of bridging finance to suit different situations.
With a bridging loan, you won’t have to miss out on finding your dream home because you will use your equity in your current home to secure a new home. The temporary bridge loan will allow you enough time to put your old home in the market, undertake the needed maintenance and repairs to prepare your current home to sell, or simply, you can move into your new home and still have enough time to sell your existing home.
Using a bridging loan for a house purchase will help you avoid making sale-contingent offers on a new home. With the temporary loan, you’ll have enough equity from your existing home’s equity to submit an acceptable offer without relying on the sale of your old home. This will make your bid more appealing to home sellers.
By making a home sale contingent offer, you’ll be telling a home seller that you’re interested in purchasing their house only if your home sells within a certain period. This means that if your home doesn’t sell within that period, the contract will be cancelled. Because of the uncertainties of the home sale timeline, sellers will be uneasily waiting for your home to close or cancel the contract. Therefore, they may not enter into such an agreement.
In the current housing market, your best chance of competing with other home buyers and settling for the home of your dreams is by submitting an offer that is free from any home sale contingencies. This is especially important if you’re looking for a home in a competitive market.
Ascot Bridging Finance gives you a large cash down payment. What’s more, getting a bridge loan to purchase a new home is a faster process than conventional loans. This is because bridge loan lenders are more flexible, and the terms are far much shorter. A typical residential bridging loan will take anywhere between 6 to 12 months, while a conventional loan can take between 15 and 30 years.
A bridging finance brokercan help you find a suitable bridging loan to suit your needs.
While both funds for home purchases, conventional loans, and bridging loans have different requirements and processes. Traditional mortgages have a repayment span over a longer term of 15 to 30 years, and they often have a low-interest rate because of the long repayment period. On the other hand, bridge loans are processed much faster, have a higher interest rate because they take a shorter period of between 6 to 12 months.
With traditional mortgages, you can borrow a maximum of 75 percent of the combined value of your existing home and the new home you want to purchase. However, this will mainly depend on the lender. For instance, if your current home is worth £150,000 and the new home you want to purchase is worth £200,000, then you can calculate the maximum bridge loan this way: (£150,000 + £200,000) x .75 = £262,500. A bridging loan advisor will be able to calculate how much you may be able to borrow, as the bridging loan LTV varies dependant on a number of factors.
Generally, bridging loans are more expensive than traditional loans because they have a higher interest rate, and they have additional charges to be considered.
Bridging loan lenders will charge high monthly interest rates. However, they won’t quote the APR because bridging loans are short term, and they may not last an entire year. loan interest rates are charged in one of three ways:
Bridging loans can help you purchase your new home without struggling to sell your home or to make sale-contingency offers when buying a new home. However, bridging loans are not all the same, and you need to find a specialist lender with favourable bridging loan rates. The best way to do this is by working with a bridging finance broker who can compare products and find the best lender to suit your needs.
Bridging finance can be used for a refurbishment project if the turnaround of the project is expected to be relatively quick. You can use a bridging loan to buy a house which at the time of purchase is deemed ‘unmortgageable’ until the renovation or remedial work is completed. Once the purchaser has completed the required works, they can apply for a mortgage and repay the bridging loan.
Bridging finance is a short-term funding and is probably the most under used form of financing available when assessing property loans. Bridging finance loans can provide fast access to funding with the minimum of formalities and can be used for a range of purposes including investment and commercial property financing through commercial bridging loans.
We help people who want to apply for a bridging loan for all sorts of circumstances. These include renovation, refurbishment or purchasing dilapidated properties for full renovation. Property loans such as these can be obtained for either investment property financing or commercial property financing. Bridging finance is simply the name for short term investment loans and is sometimes also known as interim finance. A bridging loan broker can help you find a loan that is suitable, as there are many different types of short term bridging loans available.
A bridging loan advisor can help you find a loan wite fast access to funding and the minimum of formalities. The funds can be used for a range of purposes including property investment, commercial property, land, overseas investments, buying a business, or just to raise capital to aid cash flow.
Ascot are an experienced UK bridging finance broker. Make an appointment with a bridging finance broker from our team and you’ll get the best financial advice and great customer service, as well as access to a wide range of products.
Thinking of remortgaging your current home? Want to ensure you get the best deal? Make an appointment with a remortgage specialist at Ascot Mortgages. As a broker, we have access to the best deals, and can match you to a wide range of financial products to suit your circumstances. No matter what your reasons for remortgaging, contact the team at Ascot Mortgages today and we’ll be happy to discuss your needs.