Bridging Loans Glasgow
Glasgow property is always a hot commodity because of everything the city offers residents and businesses. It’s a beautiful place to live and do business.
If you want to improve your odds of securing a Glasgow property, then you should consider taking out a bridging loan.
What is a bridging loan?
Bridging loans are effectively a short-term mortgage taken out for up to twelve months. As the name implies, this loan “bridges” the gap as a buyer sets up long-term finance such as a standard mortgage.
It takes months to learn if a mortgage application has been accepted or denied. These loans help secure property before it goes to someone else.
Bridging loans offer similar amounts as mortgages, but the costs are structured around a short-term lending period. The loans accrue interest monthly rather than annually because, more often than not, loans are paid back within a year.
They can also generate daily interest, meaning that borrowers pay back six weeks of interest rather than a full two months if they pay back the loan two weeks into the second month.
Bridging loans require a defined exit plan. This outlines how the borrower intends to pay back the loan in time.
The exit plan could be refinancing the loan using a mortgage, money made by selling another property, or the sale of the current property.
The advantages of bridging loans
- Bridging loans are arranged faster than a standard mortgage – applications process in a day or two rather than a month or two.
- These loans are secured against property value rather than credit rating, meaning borrowers with a poor credit history or a lower income can apply for them.
- Regulated bridging loans secured against personal property have “rolled up” interest. The lender adds interest to the total value of the loan to be repaid at the end of the term. Being able to pay everything back at once is great for those already dealing with personal mortgages.
- Borrowers can arrange terms to suit their circumstances and needs. Experienced mortgage brokers always advise arranging a loan for the longest available term to account for unexpected delays, but you can pay back a bridging loan early without any penalties.
- Bridging finance offers high loan-to-value (LTV) financing. Many lenders offer up to 75% LTV and some go as high as 80% with extra security on the loan. Having the option to obtain a significant amount of the finance needed means borrowers have more leverage when securing a Scottish property in Glasgow.
What are bridging loans for?
Borrowers can use the money from bridging finance for most property transactions, including:
- Buying property
- Developing and refurbishing property
- Making a down-payment on auction property
- Extending a lease
- Finalizing a property transaction
Types of bridging loans
There are two varieties of bridging finance to consider:
Open bridging loan
An open bridging loan is for people who have found a new property to buy but are yet to sell their current property.
Open bridging loans are less common due to the potential the home may never sell or take so long to sell it isn’t worth it. The more equity you have in the current property, the more likely the application will pass.
Closed bridging loan
A closed bridging loan is for people who have exchanged on a specific property already and need the finance to secure the trade.
This form of bridging loan is easier to find and secure as it is unlikely the sale won’t finish by this point.
Is bridging finance right for you?
If you live in Glasgow or are considering moving to the city, you may be wondering if bridging finance is the best choice for you.
These loans aren’t suitable for everyone, but they are a great fit for anyone who needs short-term finance without waiting months for a mortgage application to process.
Always make sure you have an exit plan in place to avoid running into trouble. When you need a bridging loan – or any form of finance – it’s best to look around and find the best deal for you.
Our trusted directory of lenders can help connect you with bridging finance providers so that you can find a deal suited to your needs.
We always recommend trying a few different providers to get the best possible deal on your bridging loan in Glasgow. If you would like help with calculating fees, then use our bridging loan calculator.