Everyone has their own reasons for moving abroad. Whether you want to enjoy life in the sun post-retirement or start a new job in another country, one thing is for certain: you’ll want to sell your property and buy a new one in your chosen location without too many delays.
It’s one of the main reasons why bridging loans can be so appealing, allowing you to quickly access funds that are tied up in your home whilst you prepare for sale.
Bridging loans can be used as a short-term lending option, usually lasting between 3 and 12 months. The funds help to ‘bridge’ the gap between the sale of one property and purchase of another.
The loan is secured against your property, much like a mortgage, although the repayment process works in a different way.
Instead of making monthly loan repayments, once the lender agrees to a gross loan amount they will then deduct:
This produces a remaining balance called a net loan, which is the amount paid into your bank account.
At the end of the loan term, you will need to repay the gross loan amount (net loan + the interest deductions and fees) in one lump sum.
Proof of income, credit check and salary details are not as important with bridging loans, as there is no monthly payment involved.
Relocating abroad? Use our bridging loan calculator to learn more about the costs involved.
To give you a better idea of how it all works, imagine that a customer enquired about a bridging loan, with the intention to relocate abroad. Before they can sell their current property, they see an opportunity to buy the perfect apartment in the location they want to move to.
The financial status of their existing property is as follows:
This would allow the customer to repay the existing mortgage as part of the bridging process.
Potential benefits
Let’s say the customer wants to explore first-charge regulated bridging loan options. They need £230,000 to clear the £80,000 mortgage and contribute £150,000 towards the purchase of the apartment, and a lender offers them the following product.
In terms of cost, this would mean the gross loan cost would be £262,208. This is broken down into:
The interest, lender fee and fee are all deducted from the gross loan cost, which means the total net loan amount – the money the customer will receive – comes to:
Net loan amount: £230,032
This would:
If there are any associated costs such as taxes or legal fees, the customer can slightly adjust the loan amount to suit their needs.
After 12 months, the customer will need to pay:
£262,208 (Plus, any exit fee — typically £100–£350, if applicable)
Important:
Most lenders rebate unused interest. For example, if the property sells within 6 months, the unused interest is refunded and deducted from the total loan figure.
The other option open to the customer would be a second charge bridge loan. This means the existing mortgage remains in place and the loan only provides the money needed to buy the new apartment abroad.
Compared to a first charge bridging loan this means:
Let’s say that the terms offered by the lender remain the same:
Cost wise, this would mean the gross loan cost would be £171,569:
After these deductions, the amount received by the customer would be:
Net loan amount: £150,000
This would allow the customer to purchase the apartment they need in their new location.
After 12 months, the customer will need to pay:
£171,569 (Plus, any exit fee — typically £100–£350, if applicable)
Important:
As is the case with first charge bridging loans, most lenders rebate unused interest.
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When you take out a bridging loan, you’ll need to have an exit strategy in place. This is because lenders will need reassurance that you have a clear plan on how to repay the full gross balance at the end of the term.
In most relocation cases, the exit strategy involves the sale of the first property. However, there may be instances, such as relocating for work, where the property is used as a buy-to-let investment and refinanced onto a buy to let mortgage.
This is something the Willows team can discuss with you in the early stages of your application, to help you create an exit strategy that fits in with your plans.
If you are relocating and are interested in taking out a bridging loan, a first or second charge option could offer the solution you need. This will depend on:
The Willows team is on hand to help you find the best solution to suit your needs. If you’re new to bridging loans, we’ll guide you through every stage of the process and will make things as easy and hassle-free as possible, so you can focus on moving to your new home.
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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.
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