Broker Basics: Financing a chain break

While it’s great to have a foot on the property ladder, how do you take the next step? If your

While it’s great to have a foot on the property ladder, how do you take the next step? If your client decides that they’d like to move and they have to work quickly, having to hold onto their current property could tie up equity that would be pivotal for their new purchase.

Without other finance options your client has two choices: Lose their new dream-home or break the property chain.

 

Loosely put, the property chain is when purchasing a new home depends on the success/completion of other transactions. This situation is pretty common for anyone looking to move home, whether it’s a young family needing to expand or elderly clients hoping to downsize and free up the property’s equity.  There could be many links in the chain, all of which need to align.

With even more mortgages being declined on the high street, it’s becoming harder to sell your property than ever before. Stricter criteria and increasing prices could leave your clients home on the market for a lot longer than they’d like. When these funds are the driving force behind getting your clients new property they may have to consider breaking the chain and temporarily financing the property with an alternative product.

Bridging finance in an ideal option for those looking to finance their dream home while trying to sell their original property. These multi-use products usually span 3 to 12 months.  Securing this kind of finance provides a breathing space that allows your client to secure their next property while giving them adequate time to find a buyer for their current one – without having to accept a lower price. The loan can be secured against the current property, intended property or a combination of both to achieve the required figure.

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As with all bridging products, an exit route is needed. The balance of the bridging loan, rolled up interest, legals and any ERCs are paid off once the original property has been sold. From there, a mortgage can be taken out on the new residence if needed.

 

If your client is looking to break their property chain, then we could find a bridging loan to suit their circumstances. Get in touch with a BDM for your area below for more information:

Contact a BDM

 

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About Us

Crystal Specialist Finance is one of the most well respected and fastest growing finance distributors in the UK.

We offer specific expert advice, products, and award-winning service to brokers and networks across five core markets: Commercial Finance, Bridging Loans, Development Funding, Second Charge Loans and Specialist Mortgages.

Operating across England, Scotland and Wales, we have access to over 70 lenders, including exclusive lines.

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