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Bridging Loans For House Purchase

Can you get a bridging loan for a house purchase?

Yes, bridging loans can be arranged for house purchases. This is a common use of bridging finance and is offered by most bridging loan brokers and lenders.

When using a bridging loan to purchase a property while waiting for your current property to sell, most lenders will allow you to borrow against both, in many cases removing the need for a deposit.

What types of property can I purchase using a bridging loan?

Bridging loans can be used to purchase the following properties:

  • Houses
  • Bungalows
  • Apartments
  • Flats
  • Semi-commercial property
  • Property in need of repair or refurbishment
  • Holiday homes
  • Land
  • Commercial property
  • Unmortgabeable property (subject to having a suitable exit strategy)

What documents will I have to provide to get a bridging loan for a house purchase?

When you apply for a bridging loan, you must provide the following:

  • Your personal details
  • Your reason for needing a bridging loan
  • Details of the property that you are purchasing
  • Details of any planned refurbishment works
  • Proof of your exit strategy

When would a bridging loan be used for a house purchase?

Bridging loans are commonly used to purchase a house in the following situations:

  • Purchasing a property before selling your existing one – When you need to complete a property purchase before selling your current home, a bridging loan can be used as a fast, temporary solution and can be repaid on the sale of your current property.
  • Buying a property in need of major refurbishment – When buying a property that is in need of major refurbishment, traditional mortgage lenders may be unwilling to lend until the work is complete. In this situation, a bridging loan can be used to purchase the property, and is then repaid once the refurbishment is complete, using a remortgage.
  • Breaking a chain – When a chain is delaying your purchase, a bridging loan can turn you into the equivalent of a cash buyer.
  • Buying a property at auction – Auction purchases must usually be completed within 28 days. This is quicker than most mortgages can be arranged, but comfortably long enough for an auction finance bridging loan to be completed.
  • Purchasing a property quickly – If you’re in need of a quick property completion, a bridging loan can be used to finance your transaction.

How much deposit is needed for a house purchase bridging loan?

The minimum deposit required for a bridging loan is 20% of the value of the property, or 25% for regulated bridging loans. When deducting the interest from the loan, meaning you have no monthly payments to make this will reduce your net loan, meaning you may need a higher deposit.

If you’re unsure how much deposit you would need, our team will be able to quickly calculate this for you, just get in touch.

How long does it take to buy a house with a bridging loan?

When buying a house with a bridging loan, the transaction can usually be completed in between 5-14 days. The legal process may delay this slightly on some purchases, although when this happens, it shouldn’t add more than 1-2 weeks to the overall process.

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