How Just Mortgage Brokers Can Help You
Are you considering using short-term bridging loans? These fast, easy-to-access loans are very useful to some borrowers and less ideal for others. To help you make an informed decision about your future finances, our experts have created a helpful guide to when quick bridging loans work well, and when they may not be as appropriate for borrowers.
When the sale of your old property is taking a long time
Selling a house is rarely straightforward. With any number of legal loopholes to jump through and conveyancing conundrums to overcome, it can take much longer than you think to sell your old property. This can seriously put the brakes on purchasing a new home.
Many residential buyers feel trapped on the housing ladder, worrying about where they will find the funds to purchase their next property, while their finances are all tied up in their old home. Fast bridging loans offer a solution to this problem, lending borrowers the money they need to secure their next dream property before it’s snapped up by another buyer, even when their old property is yet to be sold.
When arranging a mortgage is a slow process
If you’ve arranged a mortgage over the past decade, you’ll know that providers’ willingness and ability to lend has fluctuated considerably over the past ten years. Following the credit crunch, rules and regulations have also repeatedly changed, which has meant that securing a mortgage can sometimes take longer than anticipated.
While it is not advised that you take on quick bridging loans without mortgage approval, if you are waiting for loose ends to be tied up with your mortgage, a bridging loan can ensure you have the funds to purchase your new property while you wait for your mortgage to be completed. In a housing market where competition for property is fierce, access to quick bridging loans can be the difference between losing out on your ideal property and ensuring you secure the home you want.
When bidding on auction properties
Buying property at auction requires you to think – and act – fast. That’s what makes fast bridging loans a good option for those buying in this scenario, whether you’re looking for a “fixer-upper” or you earn money as a professional property “flipper”.
With successful bidders often required to pay 10% of the property price upfront as a deposit, paying the remainder outright within 28 days, it’s crucial that property auction buyers have the finance they need close at hand. If they fail to pay, the financial penalties can be severe.
Quick bridging loans are generally much faster to access than mortgages and funds from other “for sale” properties. These loans are effective when it comes to tiding auction buyers over until they can secure the long-term finance they need from more conventional sources.
When are bridging loans not appropriate?
While there are many scenarios in which short-term bridging loans are appropriate and helpful there are others in which they may be risky. You may want to avoid bridging loans when:
- You do not know exactly when or how you will be able to make repayments
- Your mortgage has not been approved and you are not confident it will be
- You have not fully understood the interest rates and fees applied to the loan
Do you think a quick bridging loan could be the right solution for your situation? Discuss your circumstances in confidence, and with no obligation, with our expert team. Contact Just Mortgage Brokers today.