Beat the Stamp Duty rush and save money with a bridging loan

We’re currently seeing one of the busiest housing markets in over a decade as people rush to beat the Stamp Duty Land Tax (SDLT) deadline.  It’s not too late to take advantage of the incentive though, with other lending options available, which could get your property purchase over the line before the end of the SDLT holiday.

On average, house prices have increased by 3.5% over the past 12 months, and the first quarter of 2021 is set to record a property uplift of 100,000 additional sales before the end of March. Nottingham, Manchester and Leeds appear to be the most buoyant cities, with house prices increasing over the past year by 5.3%, 5.2% an 4.9% respectively.

Despite the Covid-19 pandemic, these figures show now is perhaps one of the best periods in recent times to move home.

The current SDLT incentive means you don’t have to pay any Stamp Duty when you buy a new main residential property as long as it’s valued under £500,000, allowing you to potentially save thousands in fees when buying a new property.

Different rates apply to investment properties, such as Buy to Let or additional homes, but there are still savings to be made.

This period isn’t going to last for much longer though. The current holiday on Stamp Duty is scheduled to end on 31st March 2021, so if you’re thinking about moving home it’s best to do it sooner rather than later.

In fact, it’s estimated that only half of the mortgages applied for in January will be completed before the deadline, making it even more vital to get things moving now. This is due to the large increases the market is seeing in both demand and volume of moves.

So what happens if you want to move home but are seeing a delay, stuck in a chain that’s not moving, or lost a buyer and worried about missing the SDLT deadline?

How a Bridging loan can help

Bridging loans can provide quick funds to bridge the gap whilst you’re waiting for your transaction to complete. They work by allowing you to borrow funds to buy the new property, before selling your current one (you can read more here).  This could allow you to buy your new property, save the stamp duty and then transfer your mortgage to a more traditional one once you’ve sold.

Kevin Blount, Director at Clever Mortgages, said: “Beating the deadline on Stamp Duty could save you thousands of pounds, so if you’re considering moving then it really is a smart move to do so before the deadline of 31st March of next year.

“A bridging loan can help you by offering short-term finance that drastically speeds up the process and allows you to move to offer more quickly. This is opposed to moving home the traditional way, which could take months to complete due to the boom in demand we’re seeing.

“As such, we’d advise anyone thinking about moving to seriously consider a bridging loan in order to beat the Stamp Duty deadline and to get in touch with us if this is something you’re interested in.”

To find out more about how a bridging loan could help save you money on your move, give us a call on 0800 187 0504 or arrange a call back at a time that suits you.

*Data taken from Hometrack’s UK House Price Index Report for October 2020

Clever Mortgages provide specialist access to short-term Bridging Loans.

Clever Mortgages provide specialist access to short-term Bridging Loans.

The products our panel of lenders offer are competitive, reliable and cover a range of terms, circumstances and property types.

We work diligently and swiftly to ensure your requirements are met with suitable solutions that work for you and your client.

What is a Bridging Loan?

A bridging loan is a short-term finance product that bridges the gap to an exit. The exit is usually the sale of a property or a full refinance. Clever Mortgages can guide you through a bridge loan using our specialist knowledge and lender relationships.

Clever Mortgages have access to both regulated bridging loan and unregulated bridging loan products which each have their own specific uses.

Regulated bridging loans can be a go-to option for clients who have already found a property they want to purchase but still have their existing property to sell.

In these scenarios, if the client is unable to secure the new property until they have so their existing one they could be missing out on the purchase altogether. The use of a regulated bridging loan can also be applied to clients looking to move quickly on properties purchased at auction where speed and deposit availability are key.

Unregulated bridging loans could be used when a client is looking at a buy to let property, commercial property purchase or even a refurb and sell project – providing the turn-around speed and flexibility to work with their requirements and to strict timeframes.

Who can get bridging finance?

In short, anyone can get a bridging loan. Clever Mortgages will make sure the product is suitable for your needs and source the solution through a network of specialist lenders.

We source bridging loan products for Limited companies, Individuals, Sole Traders, Partnerships and most others in-between. A bridging loan can be a brilliant solution to provide yourself or your client with a short-term solution to achieve their goal.

Should I get a bridging loan?

If your circumstances require a reactive, efficient and expertly-sourced loan product then a bridging loan via Clever Mortgages could be exactly what you are looking for.

There are always considerations to be made before taking out a product which is why Clever Mortgages are able to provide specialist services and insight to select the right product and to process an application quickly.

Customers who are searching for a Bridging Loan can utilise them for a range of purposes. Speedy, efficient and specialist, we have Bridging Loans accessible through a wide variety of lenders covering both FCA Regulated and Non Regulated loans. We offer items that can cover;

  • Auction Purchase Loans
  • Development Loans
  • Financing Chain Break scenarios where a seller or buyer has pulled out of the chain
  • Refurbishment loans to develop a property pre or mid-sale
  • Below Market Value Purchase
  • Capital raising finance for most purposes

If there are any other scenarios where you feel a short-term bridging loan might work to your advantage, contact Clever Mortgages to get some expert insight and source the right product.

How long does it take to arrange?

A bridge loan can be arranged quickly which is why it is used when finance needs to be attained in a short time scale. The lender of the bridge loan may use a bridging loan calculator as well as applying their own checks to ensure the applicant meets the lending criteria.

A bridging loan may turn around as quick as X hours from application, with funds becoming available as early as Y. It is, however, more typical to see the process take a little longer as checks and procedures would still be adhered to.

Due to the nature of bridge loan lenders typically being smaller and more flexible, the time scales could be substantially shorter than a typical mortgage or loan product.

Loan terms

The bridge loan term can be anywhere from 1 day up to (usually) a maximum of 12 months, with other options becoming available later on in that time scale. There is not usually a maximum loan amount, as they are assessed based on the proposed usage, exit method and criteria on a case by case basis.

Clever Lending are experts in bridge loans and are able to source suitable solutions to niche requirements.

Is bridging finance expensive?

Due to the short term nature of bridge finance, it will always be more expensive than a traditional mortgage or other standard lending product.

The trade-off is that the finance is able to be raised quickly on a wider range of situations and due to its short-term nature facilities purchases, renovations or developments that allow other capital to be released elsewhere – through the sale of existing properties for example.

What fees can I expect?

Some of the standard fees you would expect to pay as a part of any bridge loan deal would be;

A Lender’s arrangement fee

A fee is commonly charged by a lender for providing the loan facility and is typically two percent (2%). In most instances, it can be rolled within the loan depending on client or lender requirements.

An Exit fee

This fee may be charged by the finance lender when the loan is repaid. When charged, it is usually around one month’s worth of interest regardless of whether the loan has run to its full term or was completed early.

A Surveyor’s fee

A fee will usually be payable to the firm hired to survey the property which is usually required as a part of the finance proposition process.

Legal fees

As with a standard mortgage, bridge finance must be processed with all the usual legal requirements stipulated by regulations. In some cases lenders have in-house legal professionals which may apply these costs into the lender’s arrangement fees.

Clever Lending has the expertise, speed and efficiency to deliver your short-term bridge loan solution to many possible situations.

Complete our enquiry form today or contact us on 0800 316 2224.

Why Clever?

Clever Mortgages give you access to the products you need with;

Speed and ease

We appreciate time frames are small and conversion speed is one of the most important factors in getting your finance in place to convert on your property deal.

Service quality

Our internal specialist staff and solid lender relationships let us work out finer details of any application to provide you with an answer, whilst keeping you apprised of all developments and our progress.

Complex Case Specialists

When cases or situations require specialist assistance, Clever Mortgages does not disappoint. We are able to consider all angles of a proposition and use our experience and resources to place a product where others may not be able to.

Work with Clever – Not harder