Secured Loans and Bridging Finance PDF Print E-mail

Bridging Finance

A bridging loan is a loan used for a short term fix between the transaction of selling a property and buying another. An example of when a bridging loan could be used is for instance, when the property market is at a stage to buy in, but the current property you are staying in has not been sold, so down payment funds are unavailable, then a bridging loan can be taken out to cover the period in between. Bridging Finance can be particularly useful for property developers buying at auction, perhaps the property is in need of restoration and not in a mortgageable condition, bridging finance can help bridge the gap until the property is restored to mortgageable condition and a remortgage can be then arranged. Auction buying will generally require you to complete a purchase within 28 days of the auction, bridging finance can help here too. 

Bridging loans are not only limited to property, they have in the past been used in many other uses, like raising capital for businesses and for investors.

What is a bridging loan security?
All loans require a security to base the loan interest rate on. The most commonly asked security for a bridging loan is property anywhere within the UK. Not to say that this is the only security used, but the most commonly used.

What is a bridging loan term?
Well most bridging loans are up to 12 months long, which are extendable

Professional Mortgage Services has established partnership arrangements with specialist bridging loan brokers to cater for the provision of bridging finance and will be pleased to discuss your requirements with you.

 

Want to know more? please fill in the form here and we'll be in touch.


Secured Loans

When Is a Remortgage Less Favourable than a Homeowner Loan?

 

If you are looking to raise a sum of cash secured on your home you have one of two main choices; a remortgage or a secured homeowner loan. Both involved a company lending you money based on the equity you have in your home, and in both cases the lender takes a legal ‘charge’ over your property. If you fail to keep up your repayments on the loan, your home is at risk.

However, there are various important differences between a remortgage and a secured loan. A remortgage is not necessarily the better option, as our guide shows.

Great Existing Rate on Your Main Mortgage

When you remortgage to another provider, your entire mortgage is repaid and you take out a brand new mortgage with the new lender. If the new lender is offering you a better interest rate or better terms, then this may well be a viable option for you.

However, what happens in the situation where you need to borrow additional cash, but the interest rate on your main mortgage is very good?

 

You may not wish to remortgage the whole amount of the loan as you are benefiting from a good interest rate on your main mortgage. You don’t want to lose that rate by remortgaging the whole home loan to another lender.

In this situation, a secured loan may be more beneficial. You are able to borrow the additional funds that you need but you don’t have to redeem your current mortgage. You get to keep your great mortgage rate and still borrow the additional money that you need.

 

Early Repayment Charges

 

Many mortgage deals come with ‘early repayment charges. Whether you have a fixed or discounted variable rate with your lender, the chances are that you will be ‘tied in’ to your mortgage deal for a set period.

 

For a fixed rate, you are normally committed to the deal for the term of the fixed rate, whilst discounted deals often run for 2-5 years.

 

If you repay your mortgage during one of these rates, your lender will quite often charge an ‘early repayment charge’. This can be anything from a number of days interest to a percentage of the amount you repay. Often, the charges can run into several thousand pounds.

 

Frequently, it is not financially worthwhile to remortgage if you have to pay early repayment charges to your current lender. Whilst it is not impossible, these charges generally outweigh any savings you make from moving onto a better mortgage rate with a new lender.

 

So, if you need to borrow additional cash, it may make more sense to consider secured homeowner loan. This allows you to borrow the amount you need without repaying your current mortgage. This means you avoid paying the ‘early repayment charges’ to your current lender.

 

Costs

One further reason you might want to consider a homeowner loan above a remortgage relates to the costs involved.

The costs of remortgaging can easily run into hundreds of pounds. You may have to have a valuation of your home and there may also be conveyancing fees to pay for the legal work involved in moving your mortgage. You may also have to pay a booking or arrangement fee to the new lender to secure a discounted or fixed rate mortgage deal.

A secured homeowner loan often comes with little or no set-up fees. This means you can borrow the cash you need without spending a fortune on unnecessary charges.

Professional Mortgage Services has established partnership arrangements with specialist secured loan brokers to cater for the provision of secured homeowner loans and will be pleased to discuss your requirements with you.

 

 

Want to know more? please fill in the form here and we'll be in touch.


 

 
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