First Charge Bridging Loans

Bridging loans are intended a solution for those individuals who need to cover for the so called “gap” of time which occurs between the time you can sell your property and pay for the one you wish to buy. Bridging loans are considered expensive alternatives, so you really need to check the following:

That you already can foresee the date at which your property can be sold
That you can afford such an expensive venture
That you have carefully inspected the market and could find the most fitting solution

Having a first charge put on your property, means that the first in line who will be able to recuperate their losses is the lender. For example, if the loan for which you put as security your property is evaluated at £150,000, and the loan you will receive is £100,000, and you are not able to pay back the bridging loan at the agreed date (6 months time or 12 months, depending), then the lender can sell it and recuperate his losses.

As seen, a lot of risk is involved with the undertaking of first charge bridging loans. Unless you are really sure about your decision, you shouldn’t proceed, because you may end up in losing your property. You may choose between an open ended bridging loan and a closed bridging loan. Of the two, the closed bridging loan type is the safest, because it supposes that you have already “closed” the deal with the respective buyer, but you just have to wait a little longer for the money.

If you have other outstanding debts secured with your property, it will probably be even more difficult to obtain a bridging loan. The more outstanding debts you have, the less LTV (Loan to Value) you will qualify for.

First charge gap mortgages of this type are intended solely in order to offer you the financing you need to buy another home
As soon as your property gets sold, you must repay the bridging loan in full
The sooner the term of the loan, the better. But this only if you already have exchanged contracts, and in a few months’ time you will receive the money from the buyer.
First charge bridging loans are financial products which give protection to the lender in the first place. You may lose your property very quickly, if you do not respect the terms and conditions stipulated in the contract of a bridging loan.
First charge bridging loans will always offer you a much higher Loan- to –Value than a second charge bridging loan (exactly because of the fact it involves a smaller degree of risk for the lender).