A buyer’s worse nightmare is when the purchase of their new home falls through. Fortunately, you do not have to give up on owning your dream home; a bridging loan broker can save the situation.
The house buying chain
Most people that are buying a house are in a chain. To purchase a new home, you are dependent on selling an existing home to provide some or all the money. Usually, the person buying your existing home is also dependent on the sale of their house, and is the person selling the home you are buying. This house buying chain can consist of many people, so if anything goes wrong with any house sale, it threatens the whole chain.
If the person buying your home has a delay, this holds up the sale of your existing home, leaving you without the money needed to purchase your new home. If your buyer drops out, you are left with no one to purchase your home. You’ll need to put your home on the market again, hoping to attract a new buyer.
It is estimated that around a third of house sales fall through, so there is a chance that your house chain could collapse.
The bridging loan solution
The solution when a housing chain collapses is bridging finance. A bridging loan offers short-term finance that can be quickly arranged to provide the funds to complete a house purchase. When you sell your existing home, you can repay the bridging loan.
If the sale of an existing loan is required for the whole of the purchase cost of a new home, a bridging loan can be raised for the full amount. If the proceeds of the sale of an existing loan are to be used as part payment for a new home, the bridging loan amount can be the difference between the mortgage amount and the cost of the new home.
If there is a delay in selling your house, but you have a definite completion date, then a closed bridging loan will have a fixed repayment date that will be the same as the completion date. An open bridging loan has no fixed repayment date so is suitable for situations where you do not have a completion date for the sale of your home, or you do not yet have a buyer.
Interest is charged on a bridging loan, but only until it is repaid. Most bridging loans do not have early repayment fees.
The role of the bridging finance broker
Ascot Mortgages acts as a bridging loan broker and helps make the process of applying for a bridging loan much easier. From finding a suitable lender, to helping with the application documents and forms, we can help and advise you.
Talk to an advisor at Ascot Mortgages to discover how a bridging loan can save your dream home purchase and provide more financial flexibility should a break in the house buying chain take place.