Our short term bridging loans are for purchase, refinance, property improvement or to unlock working capital for business purposes.
This unique overdraft provides you with a flexible drawdown facility giving you instant liquidity and avoids heavy setting-up costs.
Individually structured loans for residential and commercial projects, with finance available for site purchase, construction and fees, refinance, equity release and to provide working capital. Loans are available up to 90% of the site cost.
Flexible first and second charge non-regulated loans available on terms from 3 to 5 years.
We have a commitment to innovation and with the ever changing financial landscape around us we have designed a range of unique Specialist Lending products that solve a range of property finance needs.
By Jonathan Rubins, Director at Alternative Bridging Corporation
The property market thrives on a delicate relationship of interconnected transactions, meaning there are a number of dependencies which create the chain. While this can be positive, it can be much of a nuisance too. A single change in the chain can affect everyone in it, leaving buyers and sellers stranded and financially worse off. This is where chain break finance can help.
A property chain is a linked sequence of property purchases where the sale of each property is dependent on the sale of the previous property. Whilst property chains can be useful for completing a transaction quickly, they come with significant risk in the form of a chain break.
If one party fails to complete their part of the transaction, the chain can collapse, resulting in a domino effect which results in the other sellers being unable to sell their property. Not only will the affected parties loose their investment opportunity or dream home, there are often substantial financial losses endured as well. Not to mention the immense disappointment and stress that accompanies the loss of the property. The re-marketing cost, survey expenses and legal fees in addition to many other considerable expenditures are also wasted in the event of a chain break.
Chain breaks typically occur for several reasons:
· The seller no longer wants to sell their property.
· The buyer has failed to secure mortgage funds.
· Property survey issues, such as the discovery of problems which the buyer deems unacceptable.
· Legal issues, such as boundary disputes.
· Gazumping; where the buyer accepts a higher offer at the last minute, leaving the original buyer stranded.
· Change of circumstances, job losses, illness and other unforeseen events can lead parties to exit the deal.
In order to limit the risk chain break, or prevent one entirely, your client should consider taking some precautions. Preventing a property chain break is difficult due to the many dynamic factors at play, as many factors are external circumstances beyond your client’s control. However, your client can significantly reduce the risk of a chain break and increase their chances of a smooth transaction by taking several proactive steps:
Prioritise properties where the seller is not dependent on another sale, such as first-time buyers or cash buyers.
Get mortgage approval in principle
Secure pre-approval before putting in an offer. This demonstrates financial readiness and can help avoid delays due to mortgage issues later.
Opt for shorter chains
The more links in a chain, the higher the risk of a break. Choosing shorter chains whenever possible can help your client reduce the number of potential vulnerabilities.
Address any potential property defects upfront. Obtain relevant surveys and certificates early on to avoid later delays or complications.
Set attainable deadlines for each stage of the process, considering potential delays and allowing some buffer time. Communicating these timelines clearly to all involved can help improve clarity and set clear expectations for all stakeholders in the process.
Be prepared to adjust your plans if necessary. Be open to other options and solutions if unforeseen circumstances arise, such as an alternative property or seeking property finance.
If you become aware of any potential issues, communicate them transparently and immediately to all relevant parties. Early intervention can often prevent a minor issue from escalating into a chain break.
This type of insurance can offer financial protection for your client if the purchase falls through due to unforeseen circumstances.
Having qualified professionals handling the legal aspects can ensure thorough due diligence and minimise the risk of delays or complications.
Understanding current market conditions, including the likelihood of gazumping or gazundering, can help your client prepare and negotiate effectively.
If your client wants to significantly reduce the risk of a chain break, a bridging loan can be seen as the ultimate solution. Bridging loans can provide a temporary financial lifeline to purchase the new property until the existing property sells.
The likelihood of a chain break is high, with the annual property fall-through rate at 35% in 2022. With the substantial risks that accompany a chain break, it is vital to have financial protection from a chain break with a bridging loan.
In order to protect against chain breaks, Alternative Bridging offers bridging loans to cover a failed sale. Chain break finance is a bridging loan used by borrowers to support a property transaction when a property chain breaks down. It allows borrowers to access the funds they need at very short notice, even if their property still hasn’t been sold.
· Financial agility: Imagine the peace of mind knowing your client can secure their dream home while their current property finds its owners. Bridging loans provide that agility, empowering you to move forward confidently and unaffected by chain disruptions.
· Time is money: Don’t let your client’s ideal property slip through their fingers because of a broken chain. Bridging loans inject temporary funds, ensuring parties meet deadlines and capitalise on opportunities.
· Minimised stress: The emotional toll of a chain break can be very stressful. Bridging loans help to smooth over the process, allowing your client to get through stressful times calmly, knowing their transaction is secured.
Our expertise extends to a diverse range of borrowers:
· Chain break victims: Those caught in the crossfire of a collapsed chain, needing quick financial support.
· Ambitious buyers: Individuals eyeing properties with tight deadlines, where traditional finance might not offer the required speed and flexibility.
· Investors and developers: To help with time-sensitive projects requiring short-term funding solutions to capitalise on opportunities.
Being able to acquire a Residential Bridging Loan can significantly reduce the financial risk and considerable stress induced by a chain break. These loans can therefore allow the impacted party to continue with their plans unimpeded.
Preventing a property chain break was the most popular use of a bridging loan in Q3 of 2023, accounting for 22% of all bridging loans. But despite the increase in interest rates in Q3, there was an increase in bridging loan completions of 15.3%. This jump in bridging loan transactions highlights how borrowers are taking advantage of chain break finance, the loan’s flexibility and the assurance it provides.
Our Residential Bridging Loans are a short-term interest-only loan which is the ideal solution to chain break scenarios. These loans are available for up to 24 months with amounts up to £3.5m and with a competitive interest rate from 1.05% per month on first charge.
We also offer commercial bridging loans which are ideal for securing funding for acquiring commercial property and for protecting against chain break scenarios. Our commercial bridging loans are available for up to £3.5m and can be taken out for up to 24 months.
Completion times are increasing across the industry to an average of 62 days. Due to our industry-leading turnaround times, we can secure a bridging loan to complete a property purchase very rapidly. Whether for a residential or commercial property, our fast turnaround times are possible due to having our entire team under one roof. We are able to communicate efficiently and clearly with all parties involved in the loan application process. From the initial BDM contact, through underwriting and eventual fulfilment of the loan, everything is done efficiently and quickly.
We are very proud of the service we provide to brokers, service is always number one on our agenda. Why not take a look at some of the outstanding Google reviews we have received from our brokers? We frequently find that our bridging loans are used by our broker’s clients to protect themselves financially from the impacts of a devastating chain break.
If you would like to know more about how the benefits of our bridging loan products and our industry-leading turnaround times, please contact us to see how we can help. Or alternatively, give one of our experienced BDMs a call on 020 8349 5190 to discuss your bridging loan requirements.
Bridging Trends data
Bridging and Commercial
Financial Reporter
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