The shortage stock for sale is one of the main reasons why property prices hit a new record in November. According to the Halifax, pushing the annual rate of price growth up to 8.2 per cent. The stamp duty holiday may have ended but buyers are still competing for a limited number of properties, making speed more of the essence than ever.
A long and complex house-buying chain will not only slow things down but make buyers less attractive to sellers. Who have the pick of purchasers to choose from. Why wouldn’t you opt for a cash buyer rather than someone waiting on a mortgage as there are far fewer things that could go wrong and the process could be much faster?
Not all of us have the luxury of being able to buy for cash but bridging finance may be the solution for buyers who want to be chain-free. Bridging is a short-term funding solution – with terms of between one and 12 months. It is designed to get a deal done before you remortgage onto a longer-term mortgage. The idea is to bridge the gap where there is a shortfall in funding, often when you need to complete on a purchase of a new property. Before you have managed to sell your existing home and effectively turning you into a cash buyer. Bridging is arranged quickly, with lenders usually agreeing funding within a matter of days.
Bridging Finance
For example, if you have had an offer accepted on a house you wish to buy but haven’t been able to get a buyer for your property. Arranging bridging finance against your existing home enables you to complete your purchase. It means you don’t miss out on the new property. Bridging lenders will want to see an agreed exit plan in place before agreeing to lend. Your exit strategy will be to repay the bridging loan from the sale proceeds of your existing home.
Bridging finance has become increasingly mainstream as more lenders offer these products and rates have fallen. What’s more, you only pay interest for the duration of the loan. So if you take out a 12-month bridge but end up paying it back after six months because you sold your property more quickly. You only pay interest for those six months.
Bridging is a specialist area so advice is crucial. The best way to find bridging finance is to use a whole-of-market broker such as AWS Private Finance; our team is experienced in arranging bridging and enjoys good relationships with specialist bridging lenders to ensure you get competitive terms. Get in touch for more information.
