Bridging Home Loans

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A Bridging Loan may be used by a borrower who has found a new property, but has not yet sold the existing property. Bridging is a short term loan which would provide finance to purchase the new home whilst the existing home gets sold. In other words, a Bridging Loan covers the financial gap between the sale of the existing property and the new property. The loan term can be anywhere from 1 to 12 months, but is generally shorter than 12 months.

Both the new property and the existing property usually provide security for a Bridging Home Loan. The fees for this type of loan can be high and a sufficient amount of residential property security would be required as security for a Bridging Loan.

You would need proof of your income and it would need to be such that you can adequately afford pay for two loans at the same time. Lenders are fussy when approving Bridging Home Loans and may impose a variety of strict conditions.

It is the type of loan that would suit some but certainly not everyone.



Some Pros
-With a Bridging Loan, borrower can buy before selling the existing home
-Bridging Loan may be better in a rising market than in a falling market
-No need to rent interim accommodation between selling existing home and buying new home
-With a Bridging Loan you don’t need the 2nd lot of removal costs, storage of extra furniture during staying in temporary accommodation, connection and disconnection of utility costs at interim accommodation.
-Less stress associated with having to move both in and out of interim accommodation
-In a rising property market the price of the new home can be secured with a Bridging Loan before it rises further



Some Cons
-Risk of the existing home not getting sold
-Bridging Loans have higher fees
-Sufficient residential property security needed for a Bridging Loan
-Need enough income to afford to pay two loans at once
-Bridging Loan onlyprovides  short term finance
-Possibly being under pressure to discount price of existing home in order to sell due to pressure of having to pay two home loans

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