What is a Bridging Finance loan?

Bridging finance is a popular form of lending that we can provide here at Gryphon Financial. A bridging loan helps to facilitate the process of buying new property
These forms of loans are typically taken to cover the expense of purchasing new properties before the sale of an older one.

They are especially helpful if the sale is expected to go smoothly. Bridging loans are interest-only, shorter term loans (

As suggested by the name, bridging loans are typically sought by people who need additional funds to secure new property but would not have a place to move into in the meantime. They may often be necessary, as the settlement dates of purchase and selling may not coincide.

Types of Bridging Finance

It is important to understand the two basic types of bridging loans to better make an informed decision, as the risks involved will be different for each.

Open Bridging Loans

Open loans are an option if you have not yet managed to sell an existing property. This can be very helpful if funds are needed urgently. However, it is important to keep in mind that bridging loans must be repaid in full by an agreed date, and the sale of the property before the loan’s expiry date cannot be guaranteed. This means that open bridging loans are best when you can be confident that the sale will happen soon enough.

Closed Bridging Loans

A lower risk option than open loans, closed bridging loans become available when you have already reached a settlement for the sale of your property. This does not carry the risk of the property selling for lower than expected, and you will not be forced to lower your asking price if the date draws near and the property has not sold.

How much can you borrow for a bridging loan?

The amount of funds available for you depends on a number of factors. These include the following.

• The amount of equity you hold in your current property

• The value of the property itself

• The cost of the new property and any other associated costs (the one you are taking the loan to purchase)

• Your likelihood of being able to make a repayment
  
  
  

What are the rates?

Interest rates are generally higher than with other home loans, especially as the risk being undertaken increases.

There are different repayment arrangements available. Some lenders would have you pay this interest alongside existing mortgage repayments, while others will only require that you complete existing repayments until the property is sold, after which the loan interest is added to your overall outstanding balance.

Can you get a loan if you’re self-employed?

While it can be difficult to secure a loan from traditional lenders like the banks if you’re self-employed, private lenders have a much higher risk tolerance and will lend to people with less documentation, or even bad credit.

Where to secure a bridging finance loan

Bridging finance loans can be taken from both traditional and private lenders, but chances are that if you’re reading this, private lending may already be the choice for you.

Here at Gryphon Financial, we can provide bridging finance loans with same-day application approvals. We will compare from a pool of over 200 trusted lenders to secure a competitive deal for you, quickly and easily - fast settlement and no credit checks.