Chain Break Nightmare? How a Bridging Loan Can Save Your Property Deal!
A broken property chain can be every home buyer’s worst nightmare. You’ve found your dream home, had your offer accepted, and are ready to move – but suddenly, your buyer pulls out, leaving you stuck. This is where a bridging loan could be the financial lifeline you need to keep your purchase on track.
In this guide, we’ll explain how bridging finance works, why it can be a solution for a property chain break, and what to consider before applying.
What is a Bridging Loan?
A bridging loan is a short-term loan designed to “bridge the gap” between buying and selling a property. It provides immediate funding so you can proceed with your purchase without waiting for your existing home to sell. These loans are typically repaid within 6 to 12 months, either by selling your old property or securing a long-term mortgage.
Bridging loans are commonly used by home buyers, property developers, and investors who need fast access to funds to secure a deal.
Types of Bridging Loans
✅ Open Bridging Loan: No fixed repayment date, but typically repaid within 12 months.
✅ Closed Bridging Loan: Has a set repayment date, usually when a property sale is guaranteed.
✅ First & Second Charge Loans: A first charge is when the loan is the primary debt on a property, while a second charge loan is additional borrowing on a mortgaged property.
How Can a Bridging Loan Help in a Chain Break?
Property chains collapse when one buyer or seller pulls out, causing a domino effect. This can lead to lost deposits, wasted legal fees, and missed opportunities. A bridging loan steps in by:
🔹 Providing fast access to funds – so you don’t lose your dream home.
🔹 Preventing costly delays – allowing you to proceed while selling your current property.
🔹 Giving you leverage in negotiations – as a cash buyer, you may secure better deals.
🔹 Offering flexible repayment options – tailored to your circumstances.
Real-Life Example
Sarah and James found their perfect family home. They were relying on the sale of their existing house to fund the purchase. At the last minute, their buyer pulled out, causing the entire chain to collapse. Instead of losing the property, they secured a bridging loan, bought their new home, and repaid the loan after selling their old property three months later.
Who Can Use a Bridging Loan for a Chain Break?
Bridging loans are suitable for:
- Home buyers needing to complete a purchase before selling their existing home.
- Property investors who rely on chain transactions.
- Landlords & developers looking to secure an investment property quickly.
- Auction buyers needing fast funding to meet tight completion deadlines.
Costs & Considerations Before Applying
Bridging loans offer flexibility, but they do come with higher interest rates compared to traditional mortgages. Before applying, consider:
✅ Interest Rates – Typically range from 0.45% to 1.5% per month, depending on the lender.
✅ Arrangement Fees – Usually 1-2% of the loan amount.
✅ Legal & Valuation Fees – These vary based on property value and lender requirements.
✅ Exit Strategy – You must have a clear plan to repay the loan, such as selling your property or refinancing.
How to Apply for a Bridging Loan?
Applying for a bridging loan is straightforward, but working with an experienced broker can help you secure the best deal. Here’s how the process works:
Speak to a specialist broker – like Sunrise Commercial Finance to find the best deal.
Assess your affordability – ensure you have a solid repayment plan.
Provide necessary documents – proof of income, property details, and exit strategy.
Secure approval – once approved, funds can be available in as little as 48 hours!
FAQs About Bridging Loans for Chain Breaks
Q: How quickly can I get a bridging loan?
A: Bridging loans can be arranged within 48 hours to 2 weeks, depending on the lender and complexity of the case.
Q: Do I need a deposit for a bridging loan?
A: Most lenders require at least 25-30% equity in the property as security.
Q: What happens if I can’t repay my bridging loan on time?
A: Late repayment may result in penalty fees or forced property sale, so it’s crucial to have a clear exit plan.
Final Thoughts: Is a Bridging Loan Right for You?
A bridging loan can be a lifesaver in a chain break, helping you secure your property without unnecessary stress. However, it’s crucial to seek expert advice to find the right loan for your needs. At Sunrise Commercial Finance, we specialise in property development and bridging finance, ensuring you get the best deal with minimal hassle.
Need Help with a Broken Chain? Contact Us Today!
For more information contact us for a fees free chat.
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📞 Call us at 07939 091418
📧 Email: john@sunrisecommercial.co.uk
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