The UK association of Bridging Loan Lenders

Fix A Broken Property Chain with a Bridging Loan

As the latest Bridging Trends report discovered, and as we previously reported, chain breaks continue to be the most popular bridging finance use in the UK.

20% of bridging loans were used to fund a property chain break in Q1, 2021.

The frequency of property fall-throughs fluctuates regularly making it hard to know exactly how many property chains are broken month to month. Did you know in recent years, that 25% of property sales fell through due to a broken chain?

Whilst your property purchase falling through may be completely out of your control and unavoidable, depending on your circumstances there might be a quick, short-term solution: How can a bridging loan help you to fix the stress, anxiety and potential disaster of a broken property chain?

What is a property chain?

Which describes a property chain as, “a line of buyers and sellers linked together because each is selling and buying a property from one of the others.”

All it takes is one broken link for the whole thing to come crashing down.

Property chains can be problematic and cause huge delays and financial disaster for those involved. The chain delay may have nothing to do with your side of things, but it will certainly impact you. In some instances, delays can go on for months and in the worst cases, the transactions can actually fall through.

Common property chain problems

Why do property chains break? Nobody can predict what will happen with a property chain and this can cause, both buyers and sellers, to worry due to the uncertainty of the sale. There is a multitude of reasons why a property chain could collapse but a few of the more common ones are:

  • Changed circumstances of the buyer or seller during the progression of the chain.
  • The buyer or the seller changes their mind and pulls out of the purchase deal.
  • A buyer from outside of the chain has a higher offer on one of the properties within the chain - gazumping.
  • Missed financial or legal deadlines.
  • Unexpected issues arising from surveys.
  • A buyer within the chain reduces their purchase offer - gazundered.

Fixing the chain with bridging finance

A bridging loan will allow you to take out a loan against your current property so in the short term you can afford both your existing home and your new property. This ensures that you do not miss out on your property purchase and you can then re-pay the “bridge” once you sell your property.

"Not Surprised"

Discussing the prominence of chain breaks as the purpose of bridging finance, Managing Director of Impact Specialist Finance, Dale Jannels said:  

“I’m not surprised that chain break finance is top of the reasons to use bridging loans. Property transactions are booming and we’re seeing a large number of solicitors trying to exchange and complete on the same day. 

“This inevitably will result in people pulling out of purchases late on and therefore clients need a short-term loan to fill the gap their buyer left behind.”

What next?

Whilst avoiding a broken property chain might be an unavoidable situation that's completely out of your control, should you be looking for a bridging loan to help fix your broken property chain, visit our directory today to discover the best bridging loan lender to meet your requirements.

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