Property lawyers specialising in bridging loans
Using this kind of short-term finance is still comparatively unusual – that’s why you need specialist lawyers with plenty of experience of bridging finance conveyancing to make sure your transaction go smoothly.
Need a specialist Bridging Finance Conveyancing Lawyer? Call us on FREEPHONE 0800 1404544. Initial legal advice on the phone is always FREE.
What is a bridging loan?
Whether it’s to help buy your dream home or your next property investment, bridging loans are a convenient way to finance a residential or commercial property purchase when funds are required quickly or where you cannot secure a conventional mortgage. They are intended to be a short-term fix, to literally ‘bridge a gap’ in your finances.
The term of a bridging loan is much shorter than a conventional mortgage, and the rate of interest charged is usually much higher than on other types of lending. Bridging loans are also secured loans, meaning that they are secured against an asset – usually a property – which you risk losing if you cannot repay the loan in time.
4 common uses of bridging finance
Bridging finance can be useful in a range of situations, including;
Bridging loans and property investors
As well as helping people buy their dream home,bridging loan finance is commonly used by property investors and developers as a short-term loan to manage what may be a financial gap between buying and selling property, or until they can get hold of permanent funding, or the next stage of financing becomes available.
In fact buy to let investors and developers are the main users of bridging finance.
Bridging loans are often used by investors and developers when buying property in auction, or to buy properties that need significant renovation and refurb work.
It’s also regularly used by investors to provide short-term cash flow while a project obtains planning permission. In this scenario, bridging finance can also help to provide pre-construction finance before switching to a more long-term development loan once planning has been granted.
Buy to let and development finance obtained in this way helps borrowers get the cash they need quickly to snap up that below market value property bargain.
loan.
Bridging finance pros and cons
- Bridging finance advantages
♦ lending decisions are usually made quickly, often much quicker than conventional mortgages – so these types of loans allow you to gain quick access to substantial funds
♦ potentially larger sums to borrow due to it being secured against property
♦ the choice of fixed or variable interest and open-ended or closed loan terms
- Bridging finance disadvantages
♦ interest rates tend to be higher than other types of loan
♦ there are usually fees such as exit fees, arrangement fees and an additional set of conveyancing legal fees to pay
♦ like any other mortgage related products, your home or property investment is at risk if you cannot keep up with repayments.
What do bridging finance conveyancing lawyers do?
Bridging loan providers often insist that you take independent advice from bridging loan lawyers before approving your application. Your conveyancing lawyer will advise on the terms of your bridging loan, your repayment obligations, any relevant conditions and the consequences of failing to repay the loan in time. They will also ensure that you are aware of the costs associated with your bridging loan, which can often be higher than those associated with other forms of borrowing.
A lender may, for example, charge a fee to process your application, a fee when you draw down the funds and an exit fee upon repayment of the loan.
Bridging finance is often required urgently, and bridging loan lawyers are adept at working under significant time pressure to prepare comprehensive, watertight documentation that gives your application the best chance of success.