Bridging loans are fast becoming a “go-to” solution to help savvy property buyers and sellers avoid getting tangled up in stressful and costly property chains.
Nearly a third (28%) of homeowners who have used this type of short-term secured loan said this was specifically to avoid a lengthy and stressful property chain.
Of those, 29% said this was to make their ‘chain free’ offer more attractive to sellers, according to a new survey by property lender Together.
However, better awareness and understanding of how this financing works is vital, particularly as one in five (19%) of survey respondents admitted they have never heard of bridging loans before and 13% don’t know anything about how they work.
FAST AND FLEXIBLE
Bridging loans typically last up to 12 months and offer fast and flexible finance for you to borrow the money needed to buy your new home quickly, while you wait for the sale of your current home, providing additional breathing space to secure a sale at an agreed price.
They can be used to quickly seize the opportunity to buy residential (or commercial) property in time-limited situations such as auctions; or to finance refurbishments or improvements to increase a property’s value.
The loans are usually paid back by either selling your previous home (or another property you own such as a rental property) or refinancing to a longer-term mortgage.
Two fifths (40%) of survey respondents said having more education on the types of finance available when buying property and a third (31%) said better understanding of the potential costs of a broken property chain would be helpful to better understand the benefits of bridging loans.
UNSHACKLE BUYERS
Ryan Etchells (main picture, inset), Chief Commercial Officer at Together, says: “While the term ‘bridging loan’ may sound self-explanatory, our research makes clear that far too many buyers and sellers are still in the dark as to how this type of fast finance can help unshackle buyers from stressful and frustrating property chains.
“It is important to help debunk these myths so buyers and sellers are aware that there is a viable option to longer term mortgages to help you secure your ideal home.”
