The “Classic Bridge” is where clients wish to buy a property before selling their existing one and require money to bridge the time gap.
Where clients have little cash to put into the purchase, but equity in their existing property, charges can be taken over both properties.
However, bridging loans encompass far more than the Classic Bridge.
Other uses of Bridging Finance:
- Probate cases – to pay the Inheritance Tax owed on an estate, following which the estate property can be sold.
- Divorces – to release equity in the family home to allow a partner to buy a new home pending the sale of the existing home.
- Downsizing – mature borrowers may be downsizing and need to complete on their new smaller dream home before their current home is sold.
- Auction purchases – to enable investors to purchase at auction and because of the speed of bridging, to regard themselves as cash purchasers – even attempting to acquire properties before the auction.
- Capital raising – to assist with the completion of a purchase before other “locked up” funds become available.
- Buy to let – bridging provides an opportunity to snap up properties and arrange long term financing later.