Bridging Loan
Making the transition from the sale of one property to another can often be problematic, especially if you have committed to buying a new property and your original property has not been sold. Conversely, you might have sold a property, but it may not be due to settle until after the settlement of the property you are purchasing. In both of these situations a bridging loan can be the answer. As the name suggests, this loan allows you to ‘bridge’ the financing gap that can occur between the sale and purchase of two properties.
Bridging loans are generally taken out for short periods of up to 6 months, and lenders will usually take security over both properties until the second sale is finalised. There are several ways these loans can be established, with some lenders allowing borrowers to add the interest payments to their loan to relieve day-to-day financial pressure.
Other lenders may require borrowers to demonstrate that they can service both loans. All lenders can be expected to impose strict conditions on bridging loans, so it is wise to get expert advice – which Mortgageport will provide. Remember that a bridging loan is designed for short term use, so it is important to be motivated to sell the original property at the right price.
