When a chain breaks: how bridging can keep a sale moving
Every agent knows the call. A buyer further down the chain has pulled out or their mortgage has stalled, and a sale you have worked on for months is about to fall apart. Often the person caught in the middle could still buy if they did not have to wait for their own sale. That is where a chain break bridging loan can help.
What a chain break bridge does
A bridging loan is short-term finance secured on property. In a chain break, it lets your buyer complete on their purchase now and repay the loan when their existing property sells. The security can be the property being bought, the one being sold, or both. Taking both can increase the amount available, but every property charged is at risk if the loan is not repaid.
Open and closed bridges
If your buyer’s own sale has already exchanged with a completion date, the bridge is “closed”: the exit is fixed and lenders see it as lower risk. If the sale has not exchanged yet, the bridge is “open”, and the lender will want a clear picture of how and when the property will sell.
What lenders look at
The exit is everything. Lenders want to know the realistic price of the property being sold and how long it is likely to take. This is where agents help most: comparable sales and your opinion on price and marketing time carry real weight. The sale has to cover the full balance at the end, including interest, fees and selling costs, so a sensible margin between the expected price and the amount owed strengthens the case.
Costs and timing
Bridging costs more than a mortgage, with interest usually charged monthly plus arrangement, valuation and legal fees. It earns that cost when it saves a purchase that would otherwise be lost. Speed depends on valuation and legal work, so the earlier a buyer starts the conversation, the better.
Regulated or not
Where the borrower is buying their own home, a chain break bridge is usually a regulated mortgage contract, with extra protections. Investment and business bridges are generally not regulated. Your home or property may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.
A practical tip for agents
When a chain wobbles, ask the buyer early whether they have spoken to anyone about bridging. A quick conversation can show whether it is realistic before the vendor walks away.
Simon Palmer arranges bridging and development finance through Bridge & Build Finance, searching the market for the right lender for each case.
Bridge & Build Finance is operated by Smart Funding Solutions. Smart Funding Solutions is a trading style of Smart Funding Solutions Limited (FRN: 972740) who are Appointed Representatives of White Rose Finance Group Ltd (FRN: 630772) who are directly authorised by the Financial Conduct Authority.
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