Bridging finance

Tuesday, November 13, 2007

Bridging finance may be an option when a borrower moves house and the date of disposal of the existing property falls after the date of acquisition of the new one.

There are two types of bridging finance:-

Open bridging - where a borrower takes out a new mortgage without having a buyer for the existing property. This can be risky as there is no guarantee when the latter property will be sold.

Closed bridging - this is when the person buying, already has a firm buyer for the existing property.

There are not many advantages to open bridging other than enabling the borrower to complete the purchase of the new property more quickly than would otherwise be possible.

Closed bridging provides a valuable service as it allows a purchase to go ahead that otherwise might break down as a result of the purchase/sale chain breaking down. It can also be obtained at a reasonable rate.

The disadvantages are that bridging is another cost at a time when you are already incurring many other outgoings.

If you have any queries on bridging loans, feel free to call Solution Mortgages on 0845 123 1260 or apply on-line at www.solution-mortgages.co.uk