Bridging Loans for Pensioners Have Many Uses

Bridging Loans for Pensioners Have Many Uses

If you are retired and looking to release equity from your home before it sells, or to downsize to a smaller property, a bridging loan could be the right solution.

A bridging loan offers a short-term finance option to fund any shortfall in the purchase of another property whilst your current property is sold and may be a more suitable option than a long-term loan, such as a mortgage or lifetime mortgage, which could incur early redemption charges.

When is a bridging loan a suitable option for a pensioner?

• Funding renovations: Gives you access to funds before your property is put on the market.
• Downsizing: Helps you to make the move to a smaller property whilst your current property sells.
• Property chain breakdown: Supplies you with the funds to purchase your next property to avoid a breakdown in a property chain.
• Care fees: Provides you with the money to pay for care whilst waiting for long-term funding.
• Additional costs: Releases funds to support additional costs whilst your property sells.

Can pensioners apply for a bridging loan?

In short, yes. It is possible for pensioners of any age to take out a bridging loan. In theory, anybody over the age of 18 with suitable security can apply for a bridging loan. Many lenders impose a maximum age restriction of around 85, but this does not apply in all cases. Additionally, applications for bridging loans can be made with multiple applicants if other family members are to be involved.

Is there a maximum pensioner age for a bridging loan?

Many lenders set a maximum age for applicants at 85. However, for applicants over 85, KIS Finance options with lenders who do not have set maximum age criteria. Age is not the only criteria, and your exit strategy will also be an important consideration. The value of working with an experienced broker can’t be overstated.

What is the maximum term for a bridging loan?

If you are securing the loan on the property that you live in, this will be a regulated bridge and will be for a maximum term of 12 months in most cases.

For clients with high net worth, this can be increased to 36 months. If you are raising funds on an investment property, the term can be longer than 12 months.

Will a poor credit history prevent me from obtaining a bridging loan?

The key factor that the lender will consider is the strength of your exit plan. If you are selling a property to clear the bridging loan, a poor credit rating won’t prevent your application with some lenders.

How much can I borrow?

Bridging loans are available from £50,000 with no upper limit. The amount available to you will be dependent on the value of your property and your exit plan.

Understanding costs and fees for pensioner bridging loans

We have access to the best rates in the market and will always find you the cheapest rate available for your individual circumstances. The lowest rates are usually available for applications where the loan to value (LTV) is less than 55%. The LTV refers to the value of your security compared to the size of the loan.

For more details about interest rates and costs please use our quick and easy to use bridging loan calculator. It will provide you with instant figures.

What fees will apply?

Fees will vary between lenders, but you can usually expect to pay the following:

1. Lender fee: This will usually be between 0.5% to 2% of the loan value and will be added to the loan.
2. Valuation fee: Whilst lenders will on some occasions accept a desktop valuation of the security property, they may require a full valuation to ensure that it is suitable security for the loan. Fees will generally increase in line with the value of the property.
3. Legal fees: You will be required to pay your own and the lender’s legal fees, for the legal work involved in arranging the loan.
4. Broker fee: Whilst some brokers will charge you for arranging a bridging loan, at KIS Finance we don’t charge fees for our bridging services. We are paid directly by the lender, so you can benefit from our expertise at no cost to you.

What factors will the lender consider in relation to your bridging loan application?

Lenders will consider the following factors when evaluating your application:

1. Exit strategy: Lenders are most interested in how you will repay the loan at the end of your term. A safe exit strategy—such as the sale of a house in a high-demand property market—will make your application attractive to lenders.
2. Security: What you use to secure the loan is another key consideration. For most pensioners taking out a bridging loan, this will be a residential property.
3. Income: Whilst a lender will want to know details of your income, this won’t affect your application if the planned exit is the sale of your property. Income can sometimes be relevant if refinance is the exit strategy as mortgage approval is dependent on income.
4. Credit history: Your credit history is much less important for a bridging loan than for other forms of borrowing. So long as you have a strong exit strategy, such as the sale of your property, then a poor credit rating should not affect your application.

For personalised advice and to explore the best bridging loan options available to you, please use our easy-to-use bridging loan calculator or contact us directly on 0800 644 6555.

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• Bridging Finance to Buy Before You Sell
• Bridging Loan Rates and Costs
• Bridging Loan Uses
• Bridging Loan Case Studies
• Bridging Loans for Probate and Inheritance Tax

Written By Holly Andrews