It can be difficult at times to know exactly what to do next. Whether that’s a minor decision, like what to have for lunch, or major ones that will affect the direction your life travels down, there is always pressure when there is a decision to make.
Along that same vein, let’s imagine your current home, worth £750,000, is up for sale, but you’ve had your eye on a new home, worth £870k. You may be able to visualise how your next steps to look, but you’ll need to be able to bring that image to life. For this to happen, you would need a new mortgage plus a bridging loan to move forward.
Or, let’s pretend that you have saved £100,000 for a loft conversion, as well as a side-of-house extension to expand your kitchen and downstairs bathroom. For argument’s sake, let say you’re mortgage free and require a further £150,000 to start and complete their dream home improvements.
In both scenarios, these are examples of needing ‘Bridging Loans’ – the first example being residential and the latter a development loan. A bridging loan is a short-term financing option designed to “bridge” the gap between the purchase of a new property and the sale of an existing one. Besides property purchases, bridging loans can be used for property renovations, auction purchases or business cash flow needs.
Why Would I Need a Bridging Loan?
Although typically used in real estate transactions when a buyer needs to complete a purchase before selling their current property, there are a number of reasons why you might need a bridging loan. One example is a property refurbishment. By refurbishing a property, you can significantly increase its value. This, however, is not cheap and often times it can be difficult to find the funds right away. A bridging loan allows you to capitalise on this potential by funding both the purchase and renovation costs.
Perhaps you’re looking for a change of scenery, as down-sizing becomes more appealing as people go further in life. You may already have a property in mind but may be struggling to secure it due to needing to release some funds – a bridging loan can help cover that cost whilst you try and sell your home.
This is similar to a chain-break loan, which essentially works in reverse to the down-sizing needs. Sometimes you can find your dream home before you’ve sold your current one, which can make the process particularly difficult. This kind of loan will tie you over until you’re able to sell your property.
The point is, if you find yourself in a difficult position looking to buy a home, sell your current one or authorise some kind of development on it, a bridging loan is a fantastic opportunity to get the ball rolling. While bridging loans can be useful in these scenarios, it’s important to have a solid plan for repaying the loan, either through the sale of the refurbished property or by refinancing with a conventional mortgage once the work is complete.
How We Can Help
We add value by understanding these results, when you want them and how you want to get there. We’ll then aim to grow your investments, or your businesses, in a simple, effective and tax-efficient way to help achieve those goals.
With loan duration’s of up to 36 months, Morrinson Wealth understands that matters regarding homes can take a while to resolve. You can borrow an amount ranging from £50k to £25m – with adverse credit considered – you can focus on the next step of your journey with no monthly interest payments.
Numbering over 100 specialists across all aspects of financial planning, your personal financial advisor is backed up at all times by Morrinson Wealth’s support team. Clients value our personal approach to wealth management and financial advice. With over 3,000 clients and counting, our client network has grown largely through word of mouth and recommendation – making us a reliable choice to invest in your future.
Every technical, legal and regulatory aspect of your financial strategy is scrutinised to ensure best practice and the timely completion of all transactions and requirements. Whenever highly specialised expertise is required, in the unlikely event that your personal financial adviser is unable provide it, we have the people in-house who can. Cooperation, teamwork and collaboration – a partnership with Morrinson Wealth is a partnership for life.
The value of an investment with St. James’s Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested.