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How to get a bridging loan as a UK first time property buyer in 2021

Bridging loans offer short-term capital for buying a house before your longer-term funding comes through. Bridging loans could help you buy a house while you wait for the sale of your current home. Like the word said it is usually used to “bridge” the gap between the sale of a home and completion date on the purchase of their next home.

This means that the person getting the loan will be the owner of two properties for a short period of time, possibly leaving them with a big sum of secured debt if it takes a long period of time to sell the original property or you sell your home for less than you expect. But bridging loans are secured loans. The only requirement to this kind of loan is to have to have a high-value asset.

What can you use a bridge loan for? 

It can be used for different purposes which includes:

  • Buying a property
  • Property development
  • Buy-to-let investment

Bridging loans are also used by property investors at auction. Why? Because they frequently need to pay a deposit to protect their purchase promptly.

Bridging loan for property development

Bridging loans are popular with property who need to finance their projects on properties which they will sell off briskly.

Many people would wonder how to choose the best bridge loan. Well, before you start to compare bridging loans, there are a few things you’ll need to consider:

  • How much you want to take. Banks offer bridging finance from £4,000 up to £8 million and more.
  • How much your worth has your property: This determines how much you can take and rates you will get.
  • How long you need the bridging loan: This kind of loan can be as short as one month, to two years approximately.
  • Either you have a mortgage on your property (or not): This determines how much you can take through this loan.

Should I get a first charge or second charge loan?

First charge loans are where the bridge loan’s the first or only borrowing secured against your house. To be more clear, mortgages, for example, are commonly first charge loans.

On the other hand, second charge loans can be purchased when there’s already a loan or a mortgage for the property. Second charge bankers usually need the consent of the first charge banker before they can be added.

Remember that there’s no limit on how many charges can be registered on a property.

How to apply for a bridge loan 

  1. Determine what you need from your bridge loan and how long do you need to take it for.
  2. Collect the crucial details about your specific situation. How much is your property worth? Do you have a mortgage? You will need this information to find bridging loans that fit your demands.
  3. Choose which bridge loan to apply for. Read the small letter to see all the costs and fees.
  4. Once you have applied, you just need to wait to hear if your application form is approved. This could take a few days.
  5. If you get the approbation, wait for your bridge loan capital. This could take up to three weeks approximately.

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