Before you look for a loan to buy a house, it's useful to know:

  • The amount you need to borrow: Work out how much you need, this will help you find the right loan.

  • Loan term: Think about how long you need the loan for. The longer the term, the more it can cost you overall in interest.

  • If you have a mortgage: This will affect the type of bridging loan you can choose e.g. first charge or second charge loan.

  • The value of your property: This will determine how much you can borrow.

  • Your exit strategy: Outlines how you will repay the loan.

Once you know all this information you are ready to look for a bridging loan to buy a house.

Check the type you need

The type of bridging loan you need depends on your circumstances. There are two common types:

  1. 1.

    Open bridging loans: If you don't have fixed timescales e.g. you want to buy a house but haven't sold your current home. You may need the loan for up to a year or more.

  2. 2.

    Closed bridging loans: You have a fixed date and know when your funds will come through.You only need the loan for a few weeks or months.

Work out the LTV you require

Calculate what percentage of the property's value you need the loan to fund.

For example, an LTV (loan to value) of 60% on a house worth 200,000 will give you a loan of 120,000. You will need to provide the remaining 40% (80,000).

Our comparison shows the maximum LTV each provider offers.

If you already have a mortgage on your property, its likely you will be offered a lower LTV. This is known as a "second charge" loan. Here is more on the legal charges.

Consider the extra costs

You're likely to face several expenses as part of the process, such as:

  1. 1.

    Facility fees: Are charged by the lender. They can be up to 2% of the loan amount.

  2. 2.

    Legal costs: Some lenders require you to pay their solicitors' costs in addition to yours.

  3. 3.

    Exit fees: Can be charged if you pay the loan back early. It's usually around 1%.

  4. 4.

    Valuation fees: For a surveyor to value your property.

  5. 5.

    Broker commission: Fee charged by brokers for arranging the loan.

You can find out more information on the fees and charges here.

Plan and get advice

A realistic exit strategy will help you plan the loan repayment, for example, having a buyer for your home already in place. Without this you could end up stuck with an expensive loan.

How and when you repay the loan depends on your circumstances and the type of bridging loan you have. You can find out more on repaying the loan here.

Finally, before you apply consider seeking independent financial advice. This could help to determine if a bridging loan is the right option for you, otherwise you may end up with an expensive financial burden and negatively affect your credit record.

Home bridging loan FAQs

Q

Can I pay the loan back early?

A

Yes but you may be charged a fee. Read more about the fees in our bridging loan guide.

Q

Are bridging loan lenders regulated?

A

Yes, some are regulated by the FCA but some second charge loan providers are exempt from regulation. It's best to check this.

Q

Are fixed and variable loans available?

A

Yes, some providers offer fixed and variable options.

Q

Will my credit rating be taken into account?

A

Yes, the lender is likely to check this to assess how likely you are to repay the loan.