Funds can be arranged quickly and easily until a more permanent form of finance can be found.
Bridging loans are ideal when funds are not yet available from a sale waiting to go through, or there are monetary issues or time constraints (or both).
When you take out a bridging loan a legal agreement secures that the lender gets repaid as a priority should you default on repayments. This is the case with both first and second charge bridging loans.
Typically if you still have a mortgage on your property a second charge loan will be used, should your home need selling to pay off your debt. The second charge loan ensures that your mortgage would be paid off first. However, if you owned your property outright or you were taking out a bridging loan to repay your mortgage in full, you would take out a first charge bridging loan. In this case the bridging loan would be repaid first should you fail to meet repayments.
Bridging loan providers could lend anything between £25,000 and £25m+ but you’ll typically only be able to borrow a maximum loan to value ratio of 75% of the value of your property.
If taking out a first charge loan with no mortgage on your property, you’ll generally be able to borrow more than if you were taking a second charge loan out.
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Your home may be repossessed if you do not keep up repayments on your mortgage.
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