Bridging Finance is a specialist area of finance that is being used more and more, often outside of its original intended purpose, which was to ‘bridge’ the gap between a home sale and purchase. They are now taken out as a temporary reprieve of circumstances; however, many Homeowners mistake them for a solution to their circumstances, often making their circumstances much worse.
There are two types of Bridge Loan, a ‘regulated’ Bridge Loan which is a company that has provided the finance under the regulation of the Financial Conduct Authority (FCA) and an ‘unregulated’ Bridge Loan which is often referred to as a commercial Bridging Loan. Any loan that sits as the first charge on your residential property HAS to be regulated, and the Bridging company has to, therefore, has to be regulated and follow the FCA regulation in the administration of your loan.
A regulated Bridge loan is therefore likely to be a less expensive and will take longer to evict you from your Home. However, most bridging loans are unregulated and insist that there must be a commercial element to your loan and be used technically for business use.
The main issue with a Bridge loan is the short-term nature of the loan. You are not facing eviction for arrears, you facing eviction because the term has expired on the loan and you have failed to repay it. This makes the Lenders position against you far stronger.
The difference between an expired Bridge loan and a normal mortgage that has expired like on Interest Only Mortgages is the costs and the aggression involved. A normal mortgage provider will give you time to seek a proposal to resolve the case.