Bridge Your Financial Gap with a Bridging Loan
Welcome Mortgages are here to assist you with your urgent finance needs
Welcome Mortgages
What is a bridging loan?
A bridging loan is a short-term loan used to help you ‘bridge the gap’ when you want to buy something, but you’re waiting for funds to become available from the sale of something else.
What can I use a bridging loan for?
What are ‘first charge’ and ‘second charge’ bridging loans?
When you take out a bridging loan, the lender will place a ‘charge’ on your property.
This means that if you fail to repay the loan, the lender will take its repayment from the sale of the property. If you don’t have any other loans secured on your property (for example, you own it outright) then this will be a ‘first charge’ bridging loan.
With this type of loan if you fail to repay the loan and your home is sold to pay off the debt, the bridging loan lender will receive its repayment first. If you already have one or more loans secured on the property (such as a mortgage) then it will be a ‘second charge’ bridging loan. If you fail to repay the bridging loan and your home is sold to pay off the debt, the bridging loan lender would take its repayment after your mortgage provider had taken its.
Second charge loans are usually more expensive than first charge loans as there’s more chance the second charge lender won’t recover its money if you can’t keep up repayments. A second charge loan will also require the consent of the first charge lender which is normally your mortgage provider.
How much does a bridging loan cost?
Due to the short-term nature of bridging loans, they tend to be very expensive compared to other types of loan. Companies will usually charge monthly rather than annual percentage rates (APR). This type of monthly charging means that just a small difference in interest rates can have a big impact on the overall cost of your loan. For example, a 1% monthly interest rate is equivalent to 12.7% APR (taking compound interest into account). While a 2% monthly interest rate is equivalent to 26.8% APR.
Not all companies charge interest monthly.
You might also find your loan payments are deferred or rolled up. This means you don’t pay the interest on your loan until the end of the agreement.
Can I get a bridging loan with Bad Credit?
There are companies which will consider lending to you if you have ‘bad credit’, but you will be seen as ‘higher risk’ and so the cost of your loan will probably be higher too.
See our Bad Credit page to find out more about unsecured personal loans for people struggling with bad credit. It’s worth checking your credit report before you apply so you can get an idea of what your current credit history looks like.
If you do have bad credit, there are things you can do to improve your credit score
How do I find the best bridging loan for me?
Here are our top tips to help you find the right bridging loan:
Be clear on what you need from your loan
Before you start looking, work out exactly how much you want to borrow and how long for. Bridging loans are expensive, so the shorter the term, the less it will cost you.
Do your research
There are lots of loans available so make sure you compare different borrowing options. Some, such as low-interest loans, may be much cheaper than bridging loans or you can even find interest-free options. If you decide on a bridging loan, consider using a bridging loan broker who can research the market for you.
Know your situation
Lenders will want to know about your situation so make sure you have all your answers ready. Questions you can expect include:
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How much is the property worth?
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Do you have a mortgage – and if so, how much do you owe?
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How much equity do you have in the property?
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What is your monthly income and expenditure?
Why choose Welcome Mortgages for your bridging finance needs?
Look no further than our unparalleled expertise, exclusive access to deals, and proven track record of success. With years of experience in specialist mortgage brokering, we've helped numerous clients secure tailored bridging loans efficiently and effectively. In fact, our fastest application to completion deal was accomplished in just 36 hours. Partnering with Welcome Mortgages ensures access to the best deals on the market and a seamless bridging loan experience from start to finish.
