Bridging the finance gap

A growing number of buyers are seeking bridging finance to enable them to purchase a new property before they have sold their existing home.

Market conditions are such that buyers can’t take the risk that a desirable property will still be for sale once they have been able to sell their own home. As a result, lenders are seeing an increase in demand for bridging finance.

The good news is that bridging finance is not necessarily as expensive as in the past. Private banks are offering excellent terms to the right sort of client often at normal residential rates.

Melanie Bien, director of Private Finance, says: 'There is huge demand for bridging finance from wealthy clients because of market conditions and a lack of quality stock for sale. Once a buyer finds a property they like the look of, they want to do the deal as quickly as possible. Often, this will mean they can't wait until they have sold their own property for fear of missing the opportunity.

'Traditional bridging finance is notoriously expensive but there is often an alternative for the right client via a private bank. In these situations, clients can take their time selling their property and get the right price for it, rather than feeling like they have a gun to their head because the borrowing is at prohibitive rates.'

Private Finance is currently arranging a bridging facility for a client via one of the private banks at 4 per cent over Bank Base Rate (Bank Base Rate). The client is selling at £2m and purchasing at £2.5m. We have also arranged bridging at 3.5 per cent over BBR for 9 months for a client borrowing £3m who was buying four flats that he was going to convert back into a single house.

Bridging finance may be the answer if an applicant has not yet sold their home but has found one they wish to purchase.

Contact your usual Private Finance consultant, or call us on 0800 980 8777.