There are lots of reasons why people choose to downsize and use a bridging loan to help them navigate the process.
Not only is there a property to sell but there is a new one to buy, plus there may be stamp duty and other fees to consider. It can be a complicated and stressful experience, so having access to expert advice and guidance can go a long way.
A bridging loan doesn’t usually require you to make monthly payments, with everything due at the end of the term, which can help to reduce living costs in the meantime.
In simple terms, downsizing means moving to a home that is smaller in size than your current residence. This can occur for many reasons, such as:
Generally, downsizing becomes an option for people later in life, although there is no right or wrong time to consider it.
A bridging loan is a short-term loan secured against a property, much like a mortgage. However, there are some key differences between the two.
In most cases, you do not make a monthly payment to clear a bridging loan. Instead, the lender calculates the gross loan amount, then deducts fees and up to 12 month’s interest in advance.
The remaining amount is called a net loan, which is the funds sent to your bank account for you to use, and property types, bridging lenders are often happy to lender on properties in all type of conditions even non-habitable properties
If you are thinking of buying a new property before your current one is sold, a bridging loan can be taken out against one or both properties. This would provide the funds needed to buy the new property, whilst also covering any stamp duty and moving costs.
Once you have purchased the new property, you can move and continue to sell your previous home.
The property market tends to move quickly, which can mean potential opportunities disappear if you do not have the right level of funding in place.
A bridging loan gives you the option to make the most of these opportunities as they arise. You will essentially be acting as a cash buyer, which can also give you certain advantages when it comes to negotiating a good property price.
We Compare 100's of loans from leading lenders
John is thinking of taking out a downsizing bridging loan. Here is a breakdown of his financial situation:
Combined Property Value: £950,000
Stamp Duty Consideration
At the point of completion, John will own two properties. This means he will be liable to pay the higher rate of Stamp Duty Land Tax (SDLT) on the new property.
For a £350,000 property in England, this could mean a stamp duty bill of approximately £25,000 (based on rates introduced in April 2025).
However, if John sells a previous main residence within a specified timeframe, he may be eligible for a refund.
John needs a total of £375,000:
Bridging Loan Breakdown
-Interest (12 months at 0.9% per month): £71,280
– Lender Fee (1.5%): £9,900
Net loan: £578,820
-Settled mortgage balance £200,000
=: £378,820
The net loan is enough to cover the £350,000 property purchase and the additional funds needed for the stamp duty payment. This would allow John to secure his new home whilst waiting for his current one to sell.
Here are a few important points to bear in mind before you start a bridging loan application:
Whether you’re downsizing due to retirement, looking for ways to release equity in your property or need to reduce living costs, a bridging loan could offer a solution.
The Willows team can help you find the right deal to suit your finances and will guide you through the application process to make it as stress-free as possible.
To find out more, you can speak with a member of our team today by calling 01656 766 158.
Getting a quote won’t affect your credit score
We’re extremely proud to be rated ‘Excellent’ for our service standards year after year. Since 2008 we’ve helped thousands of customers across the UK to find the right finance for their needs – no matter how complicated the circumstances.
At Willows Finance we ensure your personal information is kept secure and confidential.
PRIVACY OF YOUR INFORMATION
At Willows Finance Ltd, we appreciate that your privacy is extremely important to you. With this in mind, we have put in place a number of measures to ensure that any personal details we obtain from you as a result of visiting this website is processed and maintained in accordance with accepted principles of good information handling and also in accordance with the Data Protection Act 1988.
This statement provides you with details of the type of information we may hold about you, how we obtain and use information and how we protect your privacy.
Willows Finance Limited
Brocastle, Bridgend, CF35 5AS
Authorised and regulated by the Financial Conduct Authority
Firm Reference Number: 670052
Company Number: 6678545 (Registered in England and Wales)
This document outlines the services we provide. If you need clarification, please contact us at 01656 766158.
We offer first and second charge regulated mortgage contracts for business or personal use.
Other finance options may include:
Regulatory Status:
We offer an advised mortgage broking service and provide enough information for you to make an informed decision.
We are not independent financial advisers. Free debt advice is available from the Money Advice Service.
You can view our privacy policy at: https://willowsfinance.co.uk/privacy-cookie-policy/.
Lenders may also have their own privacy policies which will be provided to you.
We charge a broker fee upon loan completion. The average fee is approximately 5%, depending on your situation.
Fee details:
No refund is offered after completion. You may pay upfront or add the fee to your mortgage. Fees and commission will be detailed in your ESIS and Mortgage Agreement.
You will receive a Mortgage Agreement and an ESIS document detailing:
You may cancel your application anytime before completion without any charge. Mortgages cannot be cancelled after completion.
Missing payments can lead to charges, repossession, and negative impacts on your credit rating.
Consolidating debt may result in higher long-term interest. Securing debt against your home increases risk.
Your home may be repossessed if you do not keep up repayments on a mortgage or other loan secured on it.
If you wish to complain, contact us at:
Willows Finance Limited
Brocastle, Bridgend, CF35 5AS
Tel: 01656 766158
You may be able to refer your complaint to the Financial Ombudsman Service.
We are covered by the FSCS. You may be eligible for compensation of up to £85,000 per person per firm for mortgage advice and arranging.
More info: www.fscs.org.uk
After processing your application, you’ll receive a Mortgage Agreement and have a 7-day reflection period.
Contact us during this period with any questions. To proceed, sign and return the agreement.
Let us know what you're looking for today