Loans

Want To Sell Your House But You’re Worried About The Damage?

Detached House With Scaffolding

Moving house is stressful. But when it’s time to jump from the nest like a brave Blue Tit the extent of damage in the property can be disconcerting financially to say the least. One solution however is to get a bridging loan.

A bridging loan is short term funding to repair or prevent damage to both private and commercial  property. The loaned sum is taken from the equity between two households. It is called a bridging loan because it literally fills the bridge in finances until the money becomes available. The money can be taken from an alternative income stream as well. The accruing interest payment can either be paid as a lump sum upfront or through regular payments. You can then sell your home fast via companies like Zoom Property Buyer who will give you a cash price for the property.

One method is to use the loan to purchase your property and then repay it when your own property sells. 

Therefore, there is a downside to a bridging loan. Interest rates tend to be higher than other loans due to the bridge loans short term nature. Other methods may be more lucrative. Such as selling your house to include any money you owe i.e. selling it for more than its original value. Bridge loans are also relatively rare unless handled by experts like Funding Guru.

Old Bank Building

 Many mortgage or bank companies refuse this type of loan in most circumstances. This is because of the risk factor involved. It is very difficult to ensure the financial situations will go as planned. According to Richard Muscus (president and chief lending officer of patriot bank) bridging loans were more popular in the lead up towards the 2008 financial crisis. 

“The primary risk is that when you’re buying a new home and selling your old one, you need to understand the strength of the financing sources of the person buying your house,” he says. “If that falls apart, the bridge collapses.” Richard Muscus 

Bridge loans have impacted many people including the rich and famous. Johnny Depp ended up losing his house and sued his business managers. This was due to them not paying back a 5 million dollar bridge loan. Even Donald Trump’s former campaign manager Paul Manafort was investigated by federal agents for incorrectly filing for a bridge loan. Furthermore, avoiding the payment of 36,000 dollars connected to the bridge loan. 

Bridge loans can be anywhere from £25,000 to 25 million. The loan has to be at least 75% of the amount the receiver perceives they are getting. 

If you are unable to sell your house one alternative to a bridge loan is to remortgage your property and create a let to buy arrangement. Lastly it is important to note that bridging loans can be both open or closed. Open means there is no definite date to pay back the loan. However, it is most often expected to be paid back within a year. A closed one is exactly how it sounds. There is a fixed date in which one has to pay back the money. 

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