Chain Break Bridging Loan

Hello, and this time on the Bridging Finance podcast, we're talking all about chain break bridging with Scott from Propertyze. Welcome back, Scott. Thank you for joining us again. Thanks for having me again. You're welcome. Well, let's look at the questions that we've got here for this episode then. So for those that aren't really aware, what do we mean by the term chain break finance, and how does this work? So typically what people will mean is that they're in the middle of a purchase, normally residential, not exclusively, it can be buy-to-lets or commercial, and they are in a chain of people. So you're buying from somebody who's buying from somebody who's buying from somebody and you've got a chain of transactions happening. Somebody's probably buying your property. So

a chain break might be that, for example, the person buying your home has pulled out the transaction, which means you now don't have funds to purchase the next one. So a chain break bridging loan will allow you to buy the next property while you still work on selling your existing property. So if it breaks that chain, you haven't got to worry about what's happening before you're in that chain. It allows the buyer to continue the purchase without waiting for their own property to sell, essentially keeps the transaction moving, giving you time to complete and secure alternative finance if your plans change for keeping both or whatever. Yes, well, really clearly explained there, but it all makes sense. Let's move on to this question it follows on. So how can you minimize

the risk of a property chain breaking? That's a difficult one. A lot of it's outside your control, largely because chains will have five, six, seven people in them sometimes. That's a lot of people with a lot of different scenarios and circumstances, and you can't control what they're going to do or what their solicitors are going to do, or whether the banks are going to pull their offers. So the best thing you can do to reduce your overall risk for yourself is being financially prepared. So having your agreement principle, your onward finance sorted, you have posited together using experience solicitors who communicate quickly and are able to act fast. Should anything come up that needs to be actioned and just

yourself being on top of it all, having all your paperwork back, everything ready to go as quickly as you can, and then fall back in the event that something goes wrong, you can use this bridging finance. Right. Okay. So some pointers there to bear in mind then preparation is key, it sounds like. Absolutely. Okay. Right. So just to go into more detail here, you've touched on a few points, but when and why would you need a bridging loan of this type? Any other reasons than already discussed? Not particularly, but just to use a chain break finance in the event that your buy drops out, but you still want to proceed with the purchase that you've found. There's a significant delay in your sale. So the person

who's buying your home is still buying it, but there is going to be longer delay to that than expected. And the person you're buying from or somebody at the chain won't wait for that. So you need to still process your purchase quickly, or if you're buying at auction under time pressures, so that can sometimes work as well. Right. Okay. Well, thank you for the recap there. Let's move on to this question. What information or documents do I need to gather for a chain break bridging loan? Any differences here? Not really. It's the standard things we kind of usually cover off when it comes to bridging loans. It's a proof of ID and proof of address. So passport and driving license typically, details of your property and the one

you're buying. So valuations, any debt outstanding on them, for example, any finance arranged for the onward one and an overview of what deposit cash you have towards the transactions so that we can work out how much finance is actually required. And understanding of the exit strategy, now in most of these scenarios, it's going to be maybe a new mortgage on the new one and the sale of your existing one. But if it's different from that, covering off and making sure that it makes sense. And then it's the standard stuff. It's the valuation reports done by the bank, by the bridging lender, and just checking that this conveyancing is going to take place in an appropriate time period. Well, a brilliant breakdown there. Again, thank you for that,

Scott. And preparation is key, as we've said previously in the previous question. Okay. So of course, how do I apply for chain break bridging finance? Then what's the process? And I'm guessing, Scott, this is where a broker can come in and help. Absolutely. The process is fast and straightforward. First things first, speak to a broker, hopefully us, and we will start to gather the information from yourselves about what the scenario is, what the sticky points are, how quickly to act. And we can then put together a short list of lenders that we want to approach, which will best fit your scenario. We'll also send you out the requirement, a list of grant documents for you to send back to us. So as previously kind of

mentioned, the ID, backstamps, AIPs, whatever it might be. Then the property is valued, the lender assesses the documents we send through, and it goes straight through to legals pretty quickly. So we can do them very quickly. We can have them done in two weeks. Most of the time, I would say to people expect four or five weeks as it is a nice, comfortable kind of timeframe, but they can be done quicker. Okay. Well, that's good news, but that just gives you an idea of the different timeframes depending on your circumstances and what happens in that process. We've got two questions left, Scott. So let's look at this one. How much does chain break bridging finance cost? So what are we looking at here?

So it's a bit more expensive than a traditional mortgage. Bridging loans are a very unique product for a very specific purpose, unlike your residential loans. But that said, so we're looking at maybe 0.6 to maybe 1% per month, depending on the loan to value required, depending on credit positioning for yourselves, location of the property, value of the loan. We can change that, but between 0.6 and 1%, a range of a fee is typically 2% of the loan amount added to the loan. So you don't pay that upfront. It's built into the loan. Evaluation and legal fees evaluation typically scales based on the value of an asset. I would say budget for 800 pounds per property. So if we are doing just the one property, 800 pounds, and you're going to have to use the new

one and your existing one because of the equity, yeah, double it, 600, 300 pounds. And legal, I usually say a thousand pounds per property. It should be less than that, but if you budget for a thousand and you've got change left over, you're probably happy. Yes, definitely. That's a good way of looking at it there, a top tip. And it's always useful to know the roundabout costs, isn't it, in advance? And that is at the time of recording this episode in May 2025. Just lastly then, Scott, you have demonstrated how a broker can help already, but have you got anything else you'd like to add? Any final thoughts? Only that really a broker can add a lot of value by assessing your options, giving you those options very clearly, and assisting

you with a chain break if you need to, because it can be very stressful. If you found your new dream home and the chain falls apart because the person's buying your home, they can't do so quickly or has to pull out the transaction, it can be very, very stressful. And especially when it's your own home, it's a very emotional investment. So the use of these products can really take that stress away. Okay, there we go. Well, Scott, thank you for that as always. Hopefully, that's proved useful to anyone listening to this, and we'll speak to you on the podcast again soon. Excellent. Thank you. Please note, SunBridging Finance is not regulated by the Financial Conduct Authority.