It is perfect for moving house if a conventional mortgage is unavailable or they are on strict time schedules.
The downsize or chain-break bridge is often used when the client is of a certain age, has no provable income or the property they are looking to buy is currently unmortgageable. In these instances it is often the sign of a good introducer that they look for alternative ways of helping their client, and that of course means exploring bridging finance.
On the typical downsize bridge, the clients own their own main residence unencumbered and wish to move to a smaller residence upon sale of their current property. What if they are too old for a standard mortgage, or what if the property they wish to purchase is currently unmortgageable - what if they need to complete by the end of the month to obtain a genuine sale at under value?
This is where a bridging loan could well assist. Typically the bridging lender will take a charge over the security being sold, but if the loan to value over the 2 properties is quite high, they may well take charge over both. The transaction can usually be completed in a matter of days and the loan can go on for as long as 12 months to allow the current security enough time to sell for the best amount.
If the property (or properties) are unmortgageable due to no kitchen/bathroom etc, or the client simply wishes to modernise the property they are looking to purchase, this can be taken into account as well and certainly holds no fears for the bridging lender. Often we are happy to lend more to the client to assist them in doing the works to the property to increase its value.
Rates are coming down and lenders are being more competitive for the “right” deal. Whether it is a reduced arrangement fee, free valuation or legal costs, or other incentives to use them, one thing is for sure - the client has never been in a better position to use a bridging loan to help them move property when the conventional methods are unavailable to them.
