Bridging Loans For UK Expats

By Georgia Galloway | Tuesday 12th December 2023 | 4 minute read

If you're an expat looking to purchase property in the UK, the application process for a traditional mortgage usually takes much longer than applications for UK nationals. The lender checks and eligibility criteria are usually much stricter. This puts expats at a severe disadvantage when buying property in the UK from abroad.

Cityscape image of Sydney, Australia with Harbour Bridge and Sydney skyline during sunset

But bridging loans can help.

A bridging loan is a fast, temporary solution until long-term financing becomes available. They’re typically used by individuals, investors and businesses looking for immediate cash flow.

For expats, this form of fast-acting finance can provide access to funds quickly – often within days rather than weeks or months which is typical with more conventional mortgage arrangements.

Why Expats Need Bridging Loans

Purchasing property while living abroad brings certain complications, currency fluctuations impacting repayments being one prime example. 

Reports suggest that expats increasingly face difficulty obtaining mortgages for properties in the UK, especially when they receive income from a foreign currency. 

A bridging loan can offer fast funds to an expat, enabling them to act quickly on a property deal or even fix any financial issues during the buying process. This evens out the playing field and ensures that, as an expat, you can still purchase property in the UK.

Bridging Loans Explained

Bridging loans cover the financial gap when you need quick funds for property transactions. It's especially useful if you're an expat looking to invest in UK property.

A bridging loan is a short-term financing solution for speedy access and flexibility. They are typically used during times of transition, such as buying a new home before selling your old one or completing a house purchase while waiting for longer-term mortgage approval.

The Mechanics Behind Bridging Loans

The amount borrowed plus any interest is usually repaid at the end of the loan term once your traditional funding comes through (like selling your existing home or receiving mortgage approval).

The borrowing period is usually from 1 month up to 12 months, with some lenders even offering more extended periods depending on circumstances and creditworthiness.

Benefits of Bridging Loans for UK Expats

Rapid Access to Funds

Bridging loans offer fast access to funds, which is often vital when purchasing property. With traditional lenders, it might take months before your loan gets approved. But with bridging finance, the turnaround time to receive the funds could be as quick as just 3 days - a speedy advantage.

Flexibility on Terms and Conditions

The terms of bridging loans are usually more flexible than those of standard mortgages or personal loans. They allow you some leeway with repayment schedules that adapt to your situation – helpful if your income fluctuates throughout the year due to contracts or seasonal work abroad.

Purchasing Power

Bridging finance lets you act swiftly on investment opportunities without waiting for long-term financing approval from banks. Buying property quickly, whether at auction or through private sales, gives an edge over competitors who may still be scrambling for funding.

Solution for Property Chains

If stuck in a problematic chain sale scenario where selling one house depends on buying another first, bridging finance is handy. It provides temporary financial relief while allowing all transactions involved in the chain to move forward smoothly. Avoiding chain breaks is another big plus for UK expats.

Funds for Property Refurbishment

Planning to buy a fixer-upper? Bridging loans can provide funds not only for purchasing but also for renovating properties. This flexibility makes them ideal tools if you consider refurbishing a property before selling it or renting it out.

Easier Approval Process

Lenders primarily assess the value of your assets rather than solely relying on income and credit history.

Applying for a Bridging Loan as a UK Expat

1. Determine your needs

The first step is to determine exactly what you need from your loan. Consider factors like the amount needed and when it needs repaying. Also, consider whether you have any assets that could serve as security for the loan.

2. Choose a lender

Picking a lender isn't just about finding someone who will give you money - they also need to understand your unique situation as an expat. Some lenders specialise in bridging loans for UK expats, so research before making any decisions.

2b. Choose a broker

However, our survey of over 1,000 people who have used bridging loans discovered that the majority of borrowers preferred to source their bridging loan via a broker. 64% of bridging finance was sourced via a broker, and 36% was via a lender.

The most common reasons people choose to utilise a broker is the advice and guidance, the ability to get the best deal available in the market with more favourable terms and rates, speed and efficiency, and the help, understanding and comfort of a broker truly knowing the borrower’s needs and circumstances.

3. Prepare documents

To apply for this type of finance, several documents are required by lenders, including proof of income and evidence of assets or equity in other properties, if applicable. Ensure these are ready beforehand so the application process runs smoothly without delays due to missing paperwork.

4. Application form

You'll then be asked to fill out an application form, which typically includes information on why this specific kind of finance would suitably fit into your current circumstances, along with outlining repayment plans. It's crucial here to be honest because discrepancies might cause problems later, such as refusal of fund disbursement even after approval was initially granted.

5. Awaiting approval

If you utilise the right broker who will present your loan to lenders in a way that highlights its strengths, loan decisions can be made on the same day, but it’s not always a guarantee. Be prepared to wait for your application to be thoroughly reviewed. Remember that the approval time can also depend on how quickly you provide all necessary documents and information requested by the lender.

6. Loan agreement

The final step is all about wrapping up your loan agreement. Reading the terms thoroughly ensures they match what you initially agreed on. Sign the document once you have double-checked that all the terms match your initial agreement. 

We're experienced financial experts who arrange short-term bridging loans for property owners, securing you the best deal from over 200 bridging loan providers, including private investors and family offices.

Get expert assistance today; we're on hand to answer any questions about bridging loans.

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Call our friendly team on 01202 612934, we're ready to help.

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