In an ideal world, when you want to move home, you secure the sale of your existing property and move into your new one around the same time. There are, a number of instances where buying your next home before selling your current one is not only possible but can be very worthwhile.
What if you find your dream home, but haven’t sold your existing house yet? Then you might want to consider a regulated bridging loan. This is a short term finance option, usually lasting up to one year that is secured against your current property.
Why might you benefit from a bridging loan?
There are a number of scenarios in which you might consider a bridging loan to purchase a property:
- To buy another home before selling your existing property
- To downsize quickly if your circumstances suddenly change
- To build your new home, perhaps in your garden, or to complete a development
- To still be able to purchase your dream house in the event of a broken property chain
The difference between a regulated and unregulated bridging loan
If a bridging loan is secured against a residential property that is currently (or soon will be) occupied by the borrower or their family, then this is classed as a ‘regulated bridge loan’. This means that the loan is regulated by the Financial Conduct Authority (FCA) and therefore provides more protection for the borrower.
If the property that is being used as security for the bridging loan is for business or investment purposes, and will not be occupied by the borrower of their family, then this is classed as an unregulated bridging loan. The same applies if the loan is taken out in the name of a business rather than a person.
Market Harborough Building Society specialises in providing regulated, residential bridging loans. To find out more about how a bridging loan could help you call our bridging specialists on 01858 412408 or 01858 412617.
How is a bridging loan repaid?
Unlike a normal loan or mortgage, you don’t have to pay back a bridging loan in monthly instalments. Instead, you will need to have an exit or repayment strategy in place at the time of application. This is your plan for repaying the loan in full, along with the interest charged, at the end of the term. We’ll check and verify your repayment plan before you obtain your loan to ensure that it is feasible.
In many cases, borrowers repay the loan using the proceeds from the sale of their original property that the loan is secured on. Alternative exit strategies include:
- The sale of investments or businesses interests
- Pension maturity
- Money that has been inherited
- Refinancing through a long term mortgage
Key features and fees of our regulated bridging loans
Our regulated bridging loans carry the following conditions and fees.
- Minimum loan amount is £200k
- Maximum loan is £3m
- Usually available for up to 12 months
- No Early Repayment Charges (ERC)
- No monthly repayments needed
- Maximum age 85 at the time of application
- An application fee of £295 (non-refundable)
- An arrangement fee of 2% that can be added to the loan balance
- A valuation fee (detailed in individual illustrations)
- Solicitors fees*
- Possible stamp duty*
* It is strongly recommended that you seek independent advice for more information about these fees.
Why Market Harborough Building Society?
We’ve been providing savings and mortgages for 150 years, and have continued to evolve and innovate whilst keeping members and communities at our heart. That’s why we’ve remained a trusted provider.
We have a wealth of experience in arranging bridging finance that is regulated by the Financial Conduct Authority (FCA) – giving you extra peace of mind. We take care to understand your situation in detail, so we can see if bridging finance is right for you.
To find out more, or to see if you’re eligible for a bridging loan, please call us on 01858 412408 or 01858 412617.