Chain Break Bridging Loan

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    A chain break bridging loan is a short-term loan that provides an immediate finance solution when you are in the middle of a property chain.

    It is designed to bridge the gap between selling a current property and purchasing a new one by preventing delays or disruptions in the property chain.

    Find your chain break solution with One

    At One, we have over 100 years of experience in the property industry. Fill out our enquiry form today, so we can help you get a good deal on your chain break bridging loan.

    What is chain break finance?

    Chain break property finance is a short-term funding solution that addresses challenges in property transactions involving independent buyers and sellers.

    In a property chain, multiple parties are involved, where the sale of one property is dependent on the purchase of another. However, delays or disruptions in the chain can occur if one party cannot proceed due to financing issues or other complications – resulting in a broken chain.

    Typical examples are where one side is ready to complete before the other, maybe one being a cash buyer.

    Chain break finance aims to overcome these obstacles by providing temporary funding to facilitate a smooth transaction – allowing buyers to purchase a property before completing the sale of their existing one.

    How does chain break finance work?

    When a buyer needs to purchase a new property but is unable to proceed due to delays in selling their previous property, chain break finance can be an ideal solution.

    This short-term loan provides the necessary funds to complete the property purchase while the buyer works on their own sale. Once the existing property is sold, the earnings are used to repay the loan.

    Eligibility criteria for chain break bridging loans

    The eligibility criteria for chain break bridging loans may vary depending on the lender and your own specific circumstances. However, here are some common factors that lenders look for:

    1. Property ownership: The borrower is usually required to own a property that is being sold as part of the chain. This property is used as security for the loan.
    2. Purchase agreement: The borrower must have a purchase agreement in place for the new property they intend to buy.
    3. Repayment plan: The borrower should have a clear and feasible plan for repaying the loan. This may include a strategy for selling the current property within a reasonable timeframe or demonstrating an alternative repayment source.
    4. Financial stability: Lenders may evaluate the borrower’s financial stability and creditworthiness to assess their ability to repay the loan. This will likely involve reviewing credit history, income, assets, and other financial commitments.
    5. Lender-specific requirements: Each lender may have their own specific eligibility criteria, such as minimum loan amounts, maximum loan-to-value ratios, and acceptable property types.

    It’s important to note that eligibility criteria can vary, and it’s advisable to consult with a specialist to understand the specific requirements and determine if you meet the criteria for chain break finance. Speak to our team to find out how we can assist you in finding the right lender!

    Interest rates for chain break bridging loan

    The interest rates for a short-term bridging loan and mortgages can vary depending on several factors, including:

    • Different lenders
    • Loan amount
    • Loan term
    • Borrower’s creditworthiness
    • Specific details of the property purchase

    Generally, bridging loans tend to have a higher interest rate than traditional mortgages due to their short-term nature and associated risks.

    Additionally, lenders may charge other fees and costs associated with the bridging loan, such as:

    • An arrangement fee
    • Valuation fees
    • Legal fees
    • Exit fees

    These additional fees should also be considered when evaluating the loan’s overall cost.

    What are chain break bridging loans used for?

    Chain break bridging loans are used to address challenges and help buyers and sellers complete property transactions smoothly. They serve as a short-term financing solution to reduce the gap between selling a current property and purchasing a new one – helping to avoid a broken property chain.

    Chain completion

    When a buyer needs to proceed with purchasing a property but cannot do so because their existing property has not yet been sold, a bridging loan provides the necessary funds to complete the purchase while the sale of the current property progresses.

    Time-sensitive transactions

    In cases where there is a time constraint or urgency, such as securing a desired property or meeting contractual obligations, chain break bridging loans offer a means to proceed with the purchase without being hindered by delays in the property chain.

    Avoiding sales falling through

    If a buyer’s property sale falls through, hindering their ability to purchase a new property, a bridging loan can provide the required funds to proceed with the purchase, ensuring the transaction is not derailed.

    Flexibility in property chains

    Chain break bridging loans provide flexibility by allowing buyers to secure their property before completing the sale of their current property. This can help buyers navigate complex property chains and reduce the risk of losing out on their dream homes.

    Why choose One to fix chain breaks

    For a smoother and more efficient process, a chain break bridging loan could help you move into your new home without any delays.

    Specialist brokers and lenders can save you time and money by assessing your circumstances and providing personalised interest rate quotes, monthly repayments, and loan terms based on your unique circumstances.

    At One, we use our extensive market experience to help match you to the right lender for the best deal. Get in touch with us and secure your dream home today!

    FAQs about chain breaking loans

    To learn more about chain break bridging loans, check out our frequently asked questions below or contact us today:

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    About One Commercial

    One Commercial have over 100 years of property experience. At One Commercial we like to use a “one stop shop” approach, utilising the whole market to support our clients in a wide range of property related finance.Their job is to make sure that they have done the hard work by matching your situation to the right commercial lender and for the best deal.

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