How a Bridging Loan Helped Me Get My Dream Home

Have you found your ideal home but haven’t sold your own property yet? A bridging loan can help you secure the property you want by providing finance to bridge the funding gap. We look at two very different case studies of buyers who needed to act quickly to get the property they wanted and how a bridging loan helped.

For Sale: A rare Bungalow by the Coast

What do you do if you spot your dream retirement property but you’re not in a position to make an offer? This can be a common situation among retirees – as well as other property purchasers - and where a bridging loan can prove its worth.

Bridging finance is designed to bridge the gap where mortgage finance may take too long to come through or where a property transaction needs to be completed quickly, such as at auction. It is a more expensive form of finance, typically with 2% upfront fees and higher interest payments than on a conventional mortgage. Nevertheless, bridging loans are only meant to be held for a short period of time – sometimes for just a few months and for no longer than two years. Often property purchasers take out a bridging loan if they want to become a cash buyer or if their sale has fallen through.

“A big area for [bridging loans] is chain-breaking,” explains John Hardman, managing director of Fluent Bridging. “We might get a client who is retired and looking to downsize. Their kids have grown up, the client wants to move from a 4-bedroomed house to a smaller property, perhaps by the coast. But in this country bungalows are in short supply.”

Getting the timing right on a sale and purchase can be a juggling act. “They’ll be looking online and they’ll see a property and think ‘that’s it, we’ll put our property on the market’,” says Hardman. “But how soon will it sell? [It could take at least three months]. So it makes bridging attractive.”

Mr and Mrs Jones came across a bungalow for sale a mile and a half away from where they lived where bungalows rarely come onto the open market. The difficulty was that they weren’t in a position to act because their own property hadn’t sold. What’s more, the deadline of the government’s stamp duty holiday was fast approaching. They had to act quickly so they sought advice from Fluent Bridging.

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“Because theirs wasn’t on the market, they couldn’t buy it,” Hardman recalls. “So we provided a bridging loan that enabled them to become a cash buyer and they immediately put their property on the market.”

What’s more, the bridging loan completed in time to enable the couple to take advantage of the stamp duty holiday as well as secure their dream home.

Wanted: A Retirement Property with 24-Hour Support

Mr and Mrs Fleming were hunting for a retirement property that would still be close to their family. Mr Fleming suffers from dementia so it was important for them to find somewhere that had the 24-hour support they needed. The couple spotted just the apartment they were looking for close to where they lived. It was a new build and on the market for £450,000. It had everything they required but the properties were selling fast and they needed to act quickly.

“Their home wasn’t on the market yet and they needed to sell in order to buy the apartment,” explains Hardman. “They were worried about losing out on this golden opportunity whilst waiting for theirs to be marketed, find a buyer and obviously complete the sale. [And] they also needed to take advantage of the stamp duty holiday.”

The couple consulted bridging loan specialists at Fluent to sound out their options. “We spoke to Mrs Fleming to gather as much information about her current residential property and circumstances, whilst also considering their vulnerability with dementia,” Hardman explains.

The specialist mortgage broker researched its exclusive panel to find a lender who could get this application completed within the necessary three week time frame and explained the costs and terms offered by the lender.

“They completed their purchase (within the stamp duty holiday) and were able to move into their new home without the stress and pressure of a chain,” says Hardman.

Always think carefully and seek specialist advice before securing a loan on your property.

Written by Piper Terrett for Fluent Money Group.

Founded in 2008, Fluent Money works with an extensive panel of lenders and will always recommend the best solution for your individual circumstances and find the best, most suitable deals. 55/Redefined has chosen to work with Fluent because they have the expertise to support you hand in hand through the application process to give you the best advice and best chance of securing the funding that you seek. They also have the best digital customer journey we have seen, keeping you up to date step by step of the process.