What Types of Short-Term Property Loans Are Available?

When it comes to buying, refurbishing or refinancing a property, the availability of money can quickly become an issue. To achieve your aims, you may need a quick, easy to secure cash injection.

It might be your dream property has just come onto the market and you have no time to lose to secure it. Alternatively, you might need to do emergency work on your new property to secure long-term financing — or you need quick cash to resolve unforeseen costs.

In all these scenarios, it’s useful to have a quick and simple short-term property loan as an option to give you the cash injection you require. So, what options do you have?

Short-term Property Loans

Bridging Loans

A bridging loan is a temporary, short-term loan you can secure using the equity of your existing home to enable you to purchase your next residence. This loan bridges the gap between the sale and purchase of properties, ensuring the buyer has the cash needed to secure their new property.

Essentially, a bridging loan allows you to buy your next home, do any refurbishments or refinance a property much easier and quicker. Loans are usually for between £100k-£2m and you need to pay them back within 4-12 months.

Once you sell your existing house, you can pay back this short-term loan and you will have already secured the down payment on your new project. Simple.

Interest-Only Mortgages

A short-term interest-only mortgage requires the borrower only to pay off the interest each month. The full loan amount is usually due at the end of the loan term.

This type of loan is a great option for anyone looking to get on the property ladder whose finances are locked up elsewhere — such as in investments. You can use this type of loan as capital to pay off a mortgage debt at the end of the term.

Short-Term Fixed-Rate Mortgage

This type of mortgage tends to be cheaper than a long-term mortgage because the lender faces less risk. This means you get a good interest rate, usually over two years.

A short-term fixed-rate mortgage can be helpful to those planning to move house soon or whose family may outgrow their new home quickly.

Short-Term Tracker Mortgage

A tracker mortgage usually comes with an interest rate in line with the Bank of England’s base rate — meaning your interest rate will change during the lending period. This mortgage allows you to borrow short term and keep interest rates low — as long as the Bank of England interest rates are too.

It’s always worth calculating if you could afford the repayments should interest rates suddenly rise, for whatever reason.

Short-Term Offset Mortgage

An offset mortgage ties into your savings account and you usually get a lower interest rate. This is because the calculation is based on the mortgage balance minus the amount held in the linked account.

This type of mortgage is usually quicker to pay off than other traditional mortgage options.

The Bottom Line

There are two main benefits of taking out a short-term property loan — the rates and flexibility.

A short-term loan allows you to take advantage of the best rates available because you won’t need a fixed interest loan due to the short lending period. They also offer the chance to make quick decisions on buying new properties or can help save you if your property needs desperate refurbishments or repairs.

No matter what your circumstances, a short-term loan could benefit you. Apex Bridging can help you secure short-term property loans quickly and professionally. We are a highly respected property finance provider that has been operating through intermediaries using the proper licenses for many years. We work with specialist valuers and solicitors to provide our brokers and borrowers with the highest quality of service. Our friendly experts are always available to keep you up to date and assist with any enquiries. Contact us to discuss short-term property loans and how to secure one with Apex Bridging.