Bridging loans are a form of short term finance, so as long as you have the collateral and an exit plan in place to secure one, it doesn’t matter what age you are. If you’re over 70 years and looking to downsize, a bridging loan is the perfect interim solution.
Bridging loans offer a practical resolution for when age-friendly living suddenly becomes a priority. At Bridging Options, we specialise in arranging bridging finance whatever your age.
Is age just a number when it comes to bridge loans?
As the government moves ahead with plans to raise the age of retirement to 68 years for both men and women, it is more important than ever that we put plans in place to pay off our mortgages so that we can start enjoying life straight away, post work. But having reached retirement age, a lot of people are finding that they are left property rich, yet cash poor.
A bridging loan could be beneficial to you if you are over the age of 70 years and have a lot of equity in your property, but very little cash readily available to you. Acquiring a bridging loan can allow you to downsize your property immediately and live life to the full, without having to worry about waiting to sell your current home.
Reason why you might need a bridging loan when over 70
The kids have long since flown the nest, you are no longer tied to a traditional working day and it’s time to start living your best life.
Perhaps you have found your dream home, need to pay for a residential investment, what to fund care home fees, are looking to move abroad or want to release equity in order to travel the world? Well with a short term bridging loan you can do whatever you want, within in a matter of days.
By securing a bridging loan for the over 70s against your current property portfolio allows you to access funds quickly, whilst saving you a lot of undue stress in the long run.
Bridging finance is normally offered on terms of between 18 months or less (depending on criteria), with the monthly interest often included. This means that there are no repayments to make during the duration of the bridge loan and once your property sells, you can repay the loan in full without incurring any penalties.
Benefits of a bridge loan for the over 70s
Many people choose to move to a new house when they retire, either to downsize, relocate closer to family, build their own bespoke home or move into specialist retirement accommodation. However, finding the right property finance to facilitate this can be tricky as many lenders have age limits on their loan products or require a higher regular income than most pensions can provide.
A bridging loan is a manageable lending alternative to a long term loan, which is often unobtainable for retirees. Unlike other types of loans which take into account your current income, bridge loans purely look at your intended repayment methods (or exit plan as it is more commonly known).
The rate of interest charged by lenders on a bridge loan only lasts a few weeks or months, making them high in comparison to other types of loans. Bridging loan rates for the over 70s, however, do tend to be a lot more competitive and are often lower than average due to the amount of equity that has built up in the property overtime.
Depending on the value of your assets, bridging loans can start at £25,000 and can go up to as much as £250million. So, when you find your ideal property a bridge loan can allow you the financial flexibility and freedom to secure the purchase without having to rush the sale of your current home.
Types of bridge loans available
For many, having the chance to access the capital gained within their homes and downsizing allows them the chance to fund their retirement. But it is vital that you do your research first.
There are two types of bridging loans available:
- Closed bridging loan – this type of bridge loan comes with a fixed repayment date. This is good if you have exchanged contracts but are waiting for your property sale to complete.
- Open bridging loan – this type of bridge loan comes with no specific end date and is commonly used to obtain funds for urgent transactions.
When you choose to take a bridge loan, a charge will be placed on your property. This is a legal agreement that indicates who would get priority repayment if the loan could not be settled within the agreed timeframe.
If you take a bridging loan on a property where is no other finance secured against it (i.e. you have paid your mortgage off), then this is known as a first charge.
If you take out a bridge loan on a property that does already have debt against it, then this is known as a second charge.
The cost of securing a bridging loan
As the bridging loan sector for the over 70s is becoming more competitive, lenders are having to offer more flexibility to the way in which interest is paid. The rate of interest for a bridge loan is normally charged in one of three ways:
- Monthly – interest is paid each month and therefore not added to the balance of the loan.
- Rolled-up – interest is accumulated each month and paid at the end of the term, when the original loan is repaid.
- Retained – the cost of the interest owed is also borrowed as part of the original bridge loan. This total amount is then repaid at the end of the agreed term.
In addition to interest rates, there are also a number of costs you have to pay including set up, administration, legal and valuation fees. This is why a bridging loan broker such as Bridging Options is useful, as they can shop around and negotiate the best bridge loan on your behalf.
Your bridge to happiness
If you need a bridging loan, and you are aged 70 or older, then contact our specialist team at your earliest convenience. At Bridging Options, we make bridging loans easy and affordable for all, giving you time to concentrate on what matters most – rest, relaxation and your new-found freedom!
For a free, no obligation telephone consultation, call us today or complete our online enquiry form.