Finding the perfect home to meet all of your needs can be a challenge, and when you finally find the home of your dreams, you don’t want to miss out. However, the process of buying a home can be lengthy and complicated, leaving you with unexpected expenses and dealing with multiple factors that could delay your purchase. This is where a bridging loan could come in handy. In this blog post, we will explore what bridging loans are and how they can help you secure your dream home.
What is a Bridging Loan?
A bridging loan is a short-term loan used to bridge the gap between purchasing a new property and selling an existing one. These loans offer quick access to funds, providing homebuyers the flexibility to move into their new home right away, rather than wait until their existing property has sold. They allow borrowers to free up funds quickly so they can secure their new home before anyone else grabs it.
How Bridging Loans Work
If you decide to take out a bridging loan your lender will take the debt you owe on your current home and add it to the amount required for your new home. This total amount is known as Peak Debt and is the total amount borrowed for a bridging loan, including stamp duty and lender fees. Once you sell your old home the proceeds from the sale will contribute to your Peak Debt, which then becomes the End Debt. The End Debt is the final amount owed and is paid off as a standard mortgage until the end of the loan term.
Why Consider a Bridging Loan
One of the most significant benefits of bridging loans is their speed and convenience. These loans provide borrowers with quick access to funds and are suitable for a wide range of circumstances, from tightening property chains to ensuring you don’t miss out on securing your dream home. They’re also suitable for commercial properties, and a variety of uses, including hospitality and retail properties, parcels of land, or commercial buildings.
Buying a home can be both exciting and stressful. Bridging loans are a useful financial tool that can help you secure your dream property quickly and easily, without worrying about delays caused by the property chain. Get in touch with us today to determine if a bridging loan could be the right choice for you.