Looking for a Bridging Loans? We can help.
How does a bridging loan work?
When obtaining a bridging loan, the lender typically assumes responsibility for your existing mortgage and supplies the necessary funds for the purchase of your new home. The Peak Debt refers to the cumulative sum that includes your current loan balance, the expenses associated with the new property, and additional charges such as stamp duty and legal fees. During this period, it is customary to make interest-only payments, which are frequently accumulated and added to the loan until the sale of your current property.
After selling your current home, the money obtained from the sale (minus any expenses incurred during the selling process) is utilised to decrease the Peak Debt. After settling the outstanding amount, referred to as the End Debt, it transforms into a conventional mortgage that you gradually repay in the future.
Two key reasons to take out a bridging loan
Interest capitalisation
A bridging loan with interest capitalisation may be an appropriate solution if your current financial resources are insufficient to cover the repayments on both properties. This feature allows you to delay the payment of interest, which will allow you to maintain financial flexibility while you await the sale of your current property.
A loan of 100% on the new property
Bridging loans can easily finance the full purchase price of a new property, including all costs. This is especially useful for people who have found a property that is beyond their borrowing capacity but will become more affordable after they sell their current home. With a bridging loan, borrowers can easily switch properties without missing out on real estate market opportunities.
Bridging loan eligibility:
- Equity in Current Property
- Income and Financial Stability
- With or without End Debt
- Credit History and Debt-to-Income Ratio
- Contract for the sale of existing property
Benefits of a bridging loan:
- Bridging loans give you quick access to funds, letting you buy a new property before selling your current one.
- Their flexibility in timing enables you to secure a new home, even if your current property has not yet sold.
- Bridging loans save you from temporary living expenses and property management.
Get the Right Help: Expert Advice on Bridging Finance
See professional guidance on bridging finance and make sure you pick the correct solution to move between properties without problems. Contact our knowledgeable team now to safeguard your financial future!
It might be necessary to move to a new lender if the one you are currently with doesn’t offer bridging loans. Your current loan may need to be paid off by the new lender, and if it has a fixed interest rate, early repayment may incur penalties.
Your bridging loan is reduced to the remaining amount, known as the End Debt, after you sell your property. This End Debt is then converted into your standard home loan, depending on the product you chose when you first applied for the bridging loan.
Bridging finance typically takes the same amount of time to obtain as other home loans, with more complicated cases possibly requiring more time for approval, and the loan can last up to 12 months.
Why choose Smooth Home Loans?
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