Buying a property can be complicated, especially if you’re waiting to sell your property before you can buy a new one. It’s not uncommon to be close to your moving date, only to get the news that the buyer has pulled out, which can throw the whole move into jeopardy. Chain breaks cause a lot of stress, but there is a way that you can continue the purchase process through a bridging loan after a chain break.
At Bridging Finance Solutions, we’ve helped endless buyers survive a chain break, and in this guide, we’ll outline exactly how you can use a bridging loan for chain breaks.
Keep reading to find out more.
What is a Chain Break?
A chain break occurs when a house sale used to fund the purchase of a new property falls through, disrupting the financial flow expected to pay for the new purchase. Property chains collapse more frequently than you may expect, as purchasing a house is such a large financial commitment, it’s not uncommon for people to change their minds.
Though common, chain breaks are incredibly disruptive and can cost you a great purchase opportunity; typical banks don’t offer a direct solution, so many people turn to bridging loans for the fast finance needed to complete the purchase.
Warning Signs Your Property Chain Might Break
If you’re selling and buying a new property and worry your chain might break, watch for these warning signs. By recognising these early warning signs, you have a better chance to find a financial solution before it’s too late.
No Mortgage Offer
One of the biggest warning signs is when the buyer hasn’t secured a standard mortgage offer, even weeks after confirming they want to proceed. If your buyer can’t prove they have formal funding for the purchase, you cannot safely commit to buying your new home, so set a deadline for the buyer to secure a mortgage offer.
Survey or Valuation Issues
When you place your existing property on the market, you might believe it’s in good condition and ready for market. However, it’s not until the house is surveyed and valued that you get an accurate picture of the condition of the property.
Thorough surveys can uncover issues you wouldn’t have considered, and if something arises that wasn’t discovered when someone initially committed to buying the property, it might prompt them to stop or halt the purchase.
Slow or Unresponsive Solicitors
Every sequence in a chain is mutually dependent, and if one part of the chain is slow or completely unresponsive, buyers can be frustrated and decide to back out of a purchase. It only takes one weak link for a whole purchase to fall through, and you have little control over how quickly your solicitor works, so having an alternative financial solution in place provides extra protection.
Vague or Changing Answers
Contact is key in any sale, and an eager buyer will be in touch often if they are serious about a purchase. If they’re very serious, they’ll contact you more than you’d contact them. If contact with the buyers is sparse or their interest in the property is inconsistent, it’s a massive red flag and may signal they’re not serious about pursuing the process.
How a Bridging Loan Fixes a Chain Break
With bridging finance, you don’t have to worry about completing the sale of your property before buying a new one, as a bridging loan provides the all-important cash injection without the waiting.
The best part of using bridging finance to pay for a property while waiting on the sale of your current property is that there’s a clear exit strategy established, as you will be able to pay off your loan once the sale has been completed, without worrying about where you’ll get the finance to pay off the loan.
You can choose monthly repayments for the loan interest, or roll it up so it’s paid off in a single lump sum, meaning you don’t have to feel the pressure of repayment until you have sold your property.
How Quickly Can Bridging Finance Be Arranged?
The speed at which a bridging loan for a property purchase can be arranged depends on the company you work with and how quickly you provide the information needed for the application. At Bridging Finance Solutions, we’ve provided emergency finance in as little as 48 hours, so if you provide the necessary information, we can expedite your application and get finance to you quickly.
How to Negotiate Once Bridging Finance is Approved
Once your bridging loan is approved, you’re no longer a buyer who depends on a chain. To the seller, you’re effectively a cash buyer, and that puts you in a much stronger position at the negotiating table.
If your chain has broken, the seller of your new property is probably just as nervous as you are. Let them, or their estate agent, know that your property chain bridging finance is in place and that the purchase no longer relies on the sale of your current home. That reassurance alone can be enough to stop them from accepting another offer.
Don’t Let a Chain Break Cost You Your Next Home
A chain break can feel like the end of the road, but it doesn’t have to be. With a bridging loan in place, you can complete on your new property without waiting for your sale, negotiate as a chain-free buyer and sell your current home on your own terms.
The key is acting quickly. The sooner you spot the warning signs and speak to a specialist, the more options you’ll have.
If your chain has broken, or you’re worried it might, get in touch with the team at Bridging Finance Solutions. We’ll talk you through your options and, where possible, get your finance in place in as little as 48 hours.
