There are certainly no doubts that a property in which you will live in is probably the most valuable item that you will ever spend your money on.
However, unless you are extremely rich and have all the money required to buy a home on your bank account, you will most likely need to borrow a substantial sum of money in order to purchase the property.
This article is dedicated to explaining different methods used to finance a property in the UK, so if you want to learn more, feel free to read until the end. Let’s take a look.
How to finance property in the UK
In the UK, there are quite a few options in terms of financing a property, and we are going to list the ones we think are more efficient just below.
- A Mortgage
Although it is a serious and also a long-term commitment that you will most likely have to be paying off each month for a very long period of time, it can sometimes be pretty useful if there is no other way for you to find the required finance in order to buy a certain property. But mortgages can sometimes be very tricky, and the amount of money you are able to borrow will also depend on a few factors such as your annual salary, etc. Usually, the amount will be something really close to your annual salary multiplied by four, but as we said earlier, this can vary a lot.
- Bridging Finance
According to www.propertyfinancepartners.com a bridging loan is usually the most often picked solution by people who need to finance a property in the UK. However, there are a few things that you need to know about it. So bridging finance is basically a short-term solution for a situation in which you need a big sum of money, but the lender knows that you will be able to pay it back in a short period of time. Such examples are when you are selling your old house but need to buy the new one before the old one is completely sold and the transaction took place. Please take note that in the process of bridging finance, the lender will almost always require a proof that the loan is indeed a short term one and that you will be able to pay it back in the shortest amount of time possible. Also, due to the nature of the loan itself, the interest rates are much higher, which is one of the reasons why you should always make sure to pay it back before they go way up.
- Auction Finance
So this type of solution is really similar to the bridging finance one and it will also require proof that a clear exit strategy exists. This method is used when you are purchasing a property at an auction, but you also need to have in mind that the transaction must be completed in less than 28 days on average. The main characteristic of this type of loan is that the money borrowed can sometimes exceed the one million mark.