Fix A Broken Property Chain with a Bridging Loan

Do you want to sell a property because you have spotted your dream home for sale, in the right location, with an extra room for a home office and within your price range? You may not find a buyer for your existing property, which means losing a chance to purchase your dream home. A property chain depends on several things happening on time and plans running smoothly. Once a chain of buyers and sellers is created, the selling process can be slowed down and liable to break. That is where a bridging loan comes in. You can take out such a loan to complete the purchase of the property before the sale of the existing one. 

 

According to research, 20% of the bridging loans are used to fund property linked finance. With the increase in property rates in the UK, the demand for bridging loans has also increased. You can get it from direct bridging leaders, p2p lending platforms, or brokers. You may be wondering how bridging finance can help you in fixing a broken property chain. Here we are going to describe everything about it. 

 

First, let's see what a property chain is. 

 

What Is A Property Chain?     

A property chain is usually described as a line of buyers and sellers who are linked together because each is selling and buying a property from one another. 

 

If only a single link breaks down, it can result in the crashing down of the whole property chain. It can be a great problem and cause financial disasters for those involved in this property chain. You may not have anything that causes chain delays; it may be from the other side, but it will also impact you. In some cases, these chain delays can go on for months and ultimately result in transactions falling through. Therefore, it is essential to prevent property chain breaks, especially for property investors and developers.

 

What Are Common Property Chain Problems? 

 

In order to avoid property chain problems, you should know why the property chain breaks. Although it is almost impossible to predict what will happen with a property chain, several reasons can cause a property chain to collapse. It can impact both buyers and sellers due to the uncertainty of the sale. 

 

Here are some common reasons for property chain breaks:

• A buyer or seller may change their mind during the process and pull out of the purchase deal. 

• The circumstances of the buyer or seller may change during the progression of the chain. 

• Missed legal or financial deadlines.

• A buyer from outside the property chain may offer higher rates for a property within the chain. 

• Unexpected issues from a survey. 

• A buyer inside the property chain may reduce the purchase offer. 

 

How Can You Fix A Property Chain With Bridging Loan? 

 

Bridging loans are short-term finance that can be a perfect solution to fix a property chain. With this loan, you can get quick access to the cash needed to purchase a property without delay. You only need to have a strong exit strategy to get quick approval for your loan application. 

 

Bridging lenders have flexible lending criteria and offer loans to borrowers with bad credit scores. You can easily get a loan as compared to traditional mortgages. Loan repayment is also easy, and you can repay the loan amount after the sale of your existing property. 

  

Bridging Loan Is A Solution To Slow House Buying Chain

A bridging loan helps you take control of a situation where you need quick funding. You can still purchase the home of your dreams, even if you are in a worse financial situation. Bridging finance takes away the worries of cash flow without any pressure of monthly repayments because you can repay the interest rate and loan amount at the end of loan terms. 

   

Another advantage of using bridging loans for property purchases is that it removes the waiting element from the property chain. Suppose you find a property on sale and want to purchase it quickly while waiting for funds to become available by the sale of the existing property. Bridging finance can fill this gap by providing you with funds so that you can complete the purchase of a property. 

 

With a bridging loan, property purchase becomes faster, more stable and more secure. 

                 

How to Secure Bridging Finance To Fix Property Chain Breaks? 

 

If you want to take out a bridging loan, you have to choose a lender. You may find a number of bridging finance providers and p2p lending platforms offering bridging loans. So, you should always do research and find the right lender. Once you choose a lender, you must make an online application with all the necessary information. The lender may ask about your financial circumstances, the amount you want to borrow and loan terms. 

 

It is a type of secured loan, so you must have a valuable asset, usually a property, to use as collateral. Loan approval highly depends on the exit strategy. It is a plan that describes how and when you will repay the loan amount. The stronger the exit strategy, the more the chances of your loan approval.

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Once you apply for a loan, the lender will assess the information you provide after completing the approval paperwork and documentation. Once the application process is completed, you will get funds transferred to your bank account, typically within two weeks. 

 

Conclusion

A bridging loan is a fast funding option that property developers and investors usually use to purchase a property. The most common use of this type of loan is to purchase a property before the sale of the other one. This way, bridging finance helps in fixing a broken property chain. However, its short-term nature has a high-interest rate, so you must keep it in mind before taking out a loan. Whether you are taking out a bridging loan to maintain a property chain or to purchase a property at auction, we suggest you take out a loan if you can afford to repay.