Posts Tagged commercial mortgage

What are bridging loans? A bridging loan (or ‘bridge loan’) can be useful if you need to borrow money for a short period. It can help to ‘bridge the gap’ if you want to buy a new home before selling your old one. Or if you need to release cash for business purposes secured against u residential or commercial property. How does a bridging loan work? There are two types of bridging loan: ‘closed’ and ‘open’. Closed bridging loans With a closed loan, there is a fixed repayment date – you will normally be given this kind of loan if you have exchanged contracts but are waiting for your property sale to complete. Open bridging loans With an open loan, there is no fixed repayment date, but you will normally be expected to pay it off within one year. Whichever kind of loan you take out, the lender will want to see evidence of a clear repayment strategy, such as using equity from a property sale or taking out a mortgage. They will also want to see evidence of the new property you are purchasing and the price you plan to pay for it, as well as proof of what you are doing to sell your current property if relevant. You should also have a back-up plan in place in case your repayment strategy fails. First and second-charge bridging loans? When you take out a bridging loan, a ‘charge’ will be placed on your property. This is a legal agreement that prioritizes which lenders will be repaid first should you fail to repay your loans. Both a first and second charge bridging loan take your property as security in case you default on repayments. Typically, if you still have a mortgage on your property, the bridging loan will be a