Bridge loans offered by Henley Finance are popular in certain types of real estate markets. Bridge loans are temporary loans that bridge the gap between the sales price of a new home and a home buyer's new mortgage, in the event the buyer's home has not yet sold. The bridge loan is secured to the buyer's existing home. The funds from the bridge loan are then used as a down payment for the move-up home. The reason buyers take out a bridge loan is to buy another home before selling an existing residence. A major benefit to a bridge loan is the fact it allows you to buy a new home without a contingency to sell.
A bridging loan is a mortgage that covers the cost of buying a new property while your old home sells. So, just how does this finance work?
• Loan size calculation – Lenders estimate the size of your loan based on the value of your new and existing mortgage. They then deduct the estimated sale price of your home from this value.
• You’ll have an ongoing balance – The value that the bank calculates is an ‘ongoing balance’. Therefore, this amount represents the principal of your bridging loan.
• Both properties act as security – Your new and existing home secure your bridging loan. Thus, you’ll have one loan covering both properties.
• Mixed rates are typical – Lenders request you make principal and interest payments on your existing loan. Although, your bridging loan amount attracts an interest-only payment.
Some benefits of bridge loans are:
• The buyer can immediately put her home on the market and buy without restrictions.
• Bridge loans may not require monthly payments for a few months.
• If the buyer has made a contingent offer to buy and the seller issues a Notice to Perform, the buyer can remove the contingency to sell and still move forward with the purchase.
Henley Finance was established in 2013 and is a short-term bridging finance company specializing in loans between three months to a year, of between £100,000 to £1,000,000 for the professional property developer. The concept of the company was devised purely from responses to clients' needs, and the experiences of borrowing in the sector by the founder, Richard Butler-Creagh.
Our new lending product enables us to lend on projects with a low loan to value ratio, which would not have previously been possible due to restrictions by the first charge holder. Even though the short-term professional loan market is highly competitive, we find that the ease of our system ensures that we always have more borrowers than we have funds for. Henley Finance is dedicated to responsibly assisting our clients wherever possible and has an impeccable track record.
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