Chain Break Bridging
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Get in touch for a free, no-obligation chat about how we might be able to help you. A fee may be payable if we progress your application. Our average fee is around £200.
The Financial Conduct Authority does not regulate some forms of Buy To Let
Your home/property may be repossessed if you do not keep up repayments on your mortgage
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Chain Break Bridging
What do we mean by the term chain break finance? How does it work?
When you’re buying or selling property, your house would fit somewhere in a chain of events where money is transferred up the chain to make each purchase.
Someone buying your property might have one to sell, and the person you’re buying from may also be purchasing a new home. Unfortunately, if something goes wrong and the chain breaks, you might not be able to purchase the property you want.
As an example, you might put your property on the market and find one that you fall in love with. You really want to buy it. You’re quite desperate not to lose that property, but if you haven’t sold, you could still find the money for the purchase without relying on a chain.
That could involve raising funds on your property in the form of a bridging loan, or a bridge on the property you’re purchasing. You could even perhaps use some savings, together with a mortgage on the property you’re looking to purchase. Essentially, you don’t always have to sell your property to make the onward purchase.
How can you minimise the risk of a property chain breaking?
In an ideal world, you would have your property on the market for a reasonable time before you start looking for somewhere to buy. An estate agent wants to see that you are proceedable – which means you’re either a cash buyer or your property is under offer, very close to offer or is in such a desirable area that you’re not going to have any problem selling. The estate agent has a duty of care to their client, to make sure you can purchase their home.
When and why would you need a chain break bridging loan?
It’s mainly where you hadn’t sold your property so you can’t extract the equity to push up the chain for the onward purchase.
Taking out a bridging loan on your property allows you to extract that equity, to use as your deposit for a mortgage or cover the whole purchase. It allows you to keep your property on the market and then, once it sells, you pay the bridge off.
What documents do I need to gather for a chain break bridging loan?
I recommend you treat it as you would a mortgage. It’s a similar set of documents. They might also want a memorandum of sale for the property you’re purchasing. They would potentially want your own property details to make sure that your property is on the market and should sell.
They will also want proof of income via payslips or two years’ worth of self-employed documents, and three months’ bank statements.
The lender may also want clarification around how long your property has been on the market. If it’s been on for six months, are you considering reducing the price? Why hasn’t it sold? They don’t want to let people get onto a bridge that they can’t get off.
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How do I apply for chain break bridging finance? What’s the process?
Speak to a mortgage broker. We’ll go through a fact-finding process to ascertain your hopes, needs and desires. Is it a case of time? Do you need something really quickly?
It may well be that your property has sold, but because someone below you hasn’t sold theirs, they can’t move funds up to let you to secure your new property. If it’s only going to be a short-term bridge, perhaps we aren’t too worried about the rate. We’d focus more on the setting up costs and exit fees.
We look at the big picture, then apply for it and manage the whole process for you.
How much does chain break bridging finance cost?
I won’t give you any rates because it’s very much case-dependent, but there’s obviously a monthly rate that the bridging company would charge.
There would be some form of arrangement fee, typically around 2%. Depending on the circumstances, we would try to get something with no exit fees.
There’s then going to be a valuation fee for the bridging company to ascertain that the property is suitable security and worth the price. There are also legal fees, because there’s a legal charge involved, so you would need a solicitor.
You’ve demonstrated how a mortgage broker can help here. Have you got anything else you’d like to add?
Just don’t be afraid of exploring bridging as an opportunity to keep a purchase on track. People think that bridging is expensive or complex – but a mortgage broker makes the complex understandable.
A bridge is a tool to make a purchase. If it’s paid back over a short period of time, in some cases, rates can be less than on an equivalent mortgage or loan. So have a chat with us. If your property isn’t selling and you really want to buy the place you’ve found, we could help you make that happen.
SOME BRIDGING FINANCE IS NOT REGULATED BY THE FINANCIAL CONDUCT AUTHORITY.
YOUR HOME/PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP TO DATE WITH YOUR MORTGAGE REPAYMENTS.
A fee may be payable if we progress your application. Our average fee is around £200 and the maximum you may pay is £995 for Retirement Interest Only products.
Mortgage Style is an appointed representative of HLPartnership Limited, which is authorised and regulated by the Financial Conduct Authority to provide mortgage advice. Mortgage Style offers regulated mortgages and bridging loans for residential properties. For any unregulated bridging enquiries, we will introduce clients to our sister company Brunel Bridging, which is a full member of the National Association of Commercial Finance Brokers (NACFB).
HLPartnership Limited nor Mortgage Style are not responsible for any advice you receive from Brunel Bridging Limited.